Next Steps for Approved EIDL Applicants
May 12, 2020
SBA seems to be progressing in processing the numerous Economic Injury Disaster Loans (EIDLs) that were applied for at the commencement of the COVID pandemic. Below is a refresher on the program that many small businesses applied for.
The EIDL assistance declaration that was issued by the SBA makes loans available to small businesses and private, non-profit organizations to help them pay bills and other expenses during the period of time when their business is disrupted due to the ongoing COVID-19 pandemic.
- Maximum Loan Amount: $2 million
- Loan Term: Up to 30 years
- Annual Interest Rates: 3.75% for businesses; 2.75% for non-profits
- SBA Turnaround Time: It is expected that it will take 21-31 days after an application is approved for funds to be disbursed.
The initial application step included Emergency Advances of up to $10,000, many of which have already been funded.
SBA is now communicating via email to applicants the next step of the EIDL process. This includes establishing a loan amount and the collecting of additional information needed to process the disaster loans over and above any previously issued Emergency Advances. Businesses may also opt not to pursue the additional EIDL funds at this time.
It is possible to obtain financing through the EIDL program while also obtaining PPP loans, although the funds must be used for different purposes. EIDL funds generally must be used for fixed debts (including rent), payroll, accounts payables, and other bills that could have been paid had the disaster not occurred. SBA has stated that EIDL funds cannot be used to pay dividends, bonuses, refinancing existing debt among others.
For applicants who have received confirmation of their EIDL approval, the SBA will likely request the following information:
- SBA Loan Application (SBA Form 5)
- Personal Financial Statement (SBA Form 413)
- Schedule of Liabilities (SBA Form 2202)
- Tax Information Authorization (IRS Form 4506T)
- Federal income tax returns for certain owners and affiliates for three years
- Current year-to-date Profit and Loss (P&L) report
- Additional information pertaining to forecasts and a narrative establishing your economic loss (SBA Form 1368)
HBE has packets available with necessary forms as listed above. We also have a team of professionals who have been designated to assist our clients with SBA disaster relief issues. If your business has been negatively impacted by the ongoing COVID-19 pandemic, we encourage you to consider these EIDL funds and respond promptly to SBA communications if you want to pursue EIDL funding.
For more resources and updates on coronavirus financial relief efforts for businesses, please click here.
This communication and any applicable contents pertaining to COVID-19 employer relief provisions is based on our professional judgment given the facts provided to us and the COVID-19 employer relief provisions guidance as of the date of the communication. Subsequent developments changing the facts provided to us, or differences in the final guidance and regulations once they are issued, may affect the advice provided. These effects may be material.