COVID EIDL Deadlines Coming Soon

Have you and all of your clients applied for all of the COVID grants and loans for which they are eligible? Chances are the answer to that question is no. According to Gene Marks, CPA, small business expert and columnist, there is about $100 billion in funds still available and the application deadline is just around the corner. Use this information to assist your clients before the December 10 and December 31 deadlines.

Why apply for loans/grants if you haven't yet?

Gene offers these three points to convince small businesses who have not applied for EIDL loans from the SBA (and available grants if applicable) at all or have not yet requested additional funds.

1. EIDL terms are very attractive, with favorable interest rates (3.75% or 2.75 for non-profits) and 30 year maturity periods.

2. EIDL rules were changed in September to allow businesses to apply for more funds up to $2 million, defer payments for two years, and use funds to pay down debt.

3. Small business grants are still available for businesses in low-income areas as shown in this map tool, including the Targeted EIDL Advance and Supplemental Targeted Advance. More information about these small business grants can be found here.

Additional information about EIDL and grant applications

Public Private Strategies Institute hosted a webinar this week with Veronica Pugin, Senior Policy Advisor of the Office of Capital Access at the SBA. Pugin highlighted the benefits of obtaining a loan from the SBA and tips on completing the application and funding process.

1. Benefits of EIDL

COVID EIDL includes significant benefits to small businesses.

Generous terms: 3.75% interest + 30-year repayment terms + 2 years deferment
Reduced repayment burden: generous terms mean monthly payments of less than $50 per month for a loan of $10,000
Flexible use: EIDL funds can be used on any normal operating expense or working capital, including paying and pre-payment of commercial debt and payment of regularly scheduled federal debt
Accessible Application: directly through the SBA, requiring no external financial institution to apply for or receive funds

2. Requirements

Requirements for COVID EIDL funds vary based on the loan amount.

$1,000 - $25,000: minimum credit score of 570, no collateral, no personal guarantee
>$25,000 - $500,000: minimum credit score of 570, for > $25,000 UCC-1 filing* is required for collateral, for > $200,000 a personal guarantee is required
>$500,000 - $2 million: minimum credit score of 625, UCC-1 filing* and business real estate (if owned) are required for collateral, personal guarantee required

*UCC-1 Financial Statements (UCC-1 filings) are filed by lenders with the debtor's state Secretary of State office. This filing allows the lender to announce a lien and subsequently foreclose on or sell that collateral if the debtor fails to repay the loan.

3. Deadlines

The deadline for EIDL and the Targeted EIDL Advance is December 31, 2021. The deadline for the Supplemental Targeted Advance is December 10, 2021.

4. Processing Time

Processing time for applications is two to three weeks for loans up to $500,000 and up to a month for loans over $500,000.

5. Previously Declined?

If a business has been previously declined, it can apply for reconsideration. A common reason for businesses to be declined is a simple mismatch between data on the intake form and upload information. Application instructions for reconsideration will be on the decision letter.

Reconsideration applications and appeal requests must be received on or before December 31. Reconsideration applications must be within six months of the date of decline by December 31 and appeal requests must be within 30 days from the date of reconsideration decline.

6. Eligible for an Increase?

If a business initially received EIDL funds but has not received the maximum eligible loan amount, log into the portal and click the "request more funds" button. If the button is not visible, there is a good chance that the business has already received the maximum eligible loan. For questions, send a request to covideidlincreaserequests@sba.gov.