The Small Business Administration (SBA) is certainly not immune to the havoc caused by the pandemic to many small businesses. As a matter of fact, it’s just retooled its Economic Injury Disaster Loan (EIDL) program, so even if you were previously turned down for an EIDL, the SBA suggests you reapply.
“Our mission-driven SBA team has been working around the clock to make the loan review process as user-friendly as possible to ensure every entrepreneur who needs help can get the capital they need to reopen, recover and rebuild,” said SBA Administrator Isabella Casillas Guzman.
The changes recently made to the EIDL program include:
- The COVID cap increases from $500K to $2M.
- Repayment doesn’t start for two years.
- Funds will now be eligible to prepay commercial debt and make payments on federal business debt.
- There is a 30-day exclusivity window of approving and disbursing funds for loans of $500,000 or less, and approval and disbursement of loans over $500,000 will begin after the 30-day period.
In addition, the application process has been streamlined to include more simplified affiliation requirements that model those of the Restaurant Revitalization Fund.
COVID EIDLs are different from regular Disaster Loan Program loans. The SBA has been authorized to make these low-interest fixed-rate long-term loans to provide small businesses with funds to use as working capital to meet ordinary and necessary operating expenses. The program is scheduled to end on December 31, 2021, or when funds are exhausted, whichever occurs first.
The loan term is 30 years and the interest rate is 3.75% fixed. Interest will accrue from the time the funds are dispersed, despite the fact that payments are deferred for the first two years. There is no penalty for prepayment. Collateral is required for loans greater than $25,000, and a personal guaranty is necessary for loans greater than $200,000.
Not all applications will be approved, and the most common reasons for a decline are:
- Unsatisfactory credit history
- Unverifiable information
- Already reaching the $2M limit
- Ineligible non-U.S. citizen status
- Business activity not eligible
- Failure to respond to a request for more information
The SBA, like Clear Skies Capital, is in your corner when it comes to helping you overcome challenges you face as a result of the pandemic. Even if your EIDL application is declined for any reason, we may be able to help you secure the funds you need to get your business through this unique time.
Don’t wait! Give us a call today at 800-230-9822 to discuss any questions you have before applying for your EIDL or if you have already been turned down.