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The COVID-19 pandemic has been a very long emergency. Small businesses dealing with the pandemic and perhaps other disasters as well may be searching for any and all relief available to them. The Small Business Administration (SBA) offers emergency funding through its Economic Injury Disaster Loan (EIDL) program.
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In normal times, EIDLs are available to businesses located in areas where a declared disaster, such as a hurricane or wildfire, took place. But in 2020, the SBA also implemented a separate COVID-19 EIDL program for businesses across the country that were negatively impacted by the pandemic. How much can you really borrow for your small business through the EIDL program right now? Find out whether or not you can get more than one EIDL.
Can you apply for an EIDL loan twice?
If you’re wondering if you can apply for a second EIDL, the answer is “it depends.” Here are three different scenarios to illustrate how the process works:
- Your original EIDL application was denied. In this case, you should have received a reason for why your application wasn’t accepted. If you can address the SBA’s concerns, then you can initiate an EIDL reconsideration request.
- You want a second EIDL. You may apply for only one COVID-19 EIDL. But if your business is located in a declared disaster area and it experienced additional economic injury, you may apply for a separate EIDL as well as a COVID-19 EIDL.
- You received COVID-19 EIDL funds before the loan limit increased either in April 2021 or in September 2021. In either case, you can request a larger loan amount. Technically, this isn’t considered getting an additional loan. Rather, you’re simply taking advantage of new rules regarding loan limits. The SBA will contact you if you’re eligible for additional funds.
Can you increase your EIDL size?
In some cases. The SBA increased the size of COVID-19 EIDLs, starting with loans approved April 7 or later. That maximum loan amount was $500,000. As of Sept. 8, the maximum has been increased again, this time to $2 million. To check your eligibility, compare the new loan limit to your current loan amount. While there’s no direct way to apply for more funds on the SBA’s public website, you should receive instructions from the SBA on how to move forward if you choose.
EIDL size standards
In order to qualify for COVID-19 EIDLs, eligible businesses must have 500 employees or fewer. In addition to small businesses, agricultural enterprises and co-ops meeting the same employee limits may also qualify for a COVID-19 EIDL.
SBA size standards
Many SBA financing programs refer to “size standards.” This is the maximum size a company can be and still qualify as a small business. Each industry has its own size standard. Business owners can use the SBA’s Size Standard Tool to check eligibility.
PPP size standards
Looking at another program created to help stem the financial impact of the COVID-19 pandemic, Paycheck Protection Payment (PPP) borrowers could meet size standards in a few different ways. In order to be considered small businesses they must qualify using one of the following size standards:
- 500 employees or fewer
- Average annual receipts less than the industry-specific threshold (you can use the Size Standard Tool to check)
- Alternative-based measures such as net worth and/or net income
How to request an increase to your existing EIDL loan
The SBA website links to the requirements and the form to request an increase to your COVID-19 EIDL loan. SBA loan rates are typically much lower than those for private loans for small businesses. So if your business does need additional funding, this could be a good opportunity. However, EIDL loans are not forgivable. Unlike PPP loans, they must be repaid in full. Plus, that maturity term can be as long as 30 years. That’s a long time for your business to repay debt if the funds aren’t actually needed. So it’s generally wise not to borrow more than you need.
EIDL maximum loan amounts
As of Sept. 8, 2021, the SBA raised its COVID-19 EIDL limits. When calculating your EIDL loan amount, the current limit is $2 million. Any COVID-19 EIDL amount over $25,000 requires collateral, typically in the form of a general security agreement from the SBA. This uses your business assets as collateral for the loan. The good news is that you don’t have to offer a personal guarantee to qualify for these funds.
PPP maximum loan amounts
The PPP program is separate from the COVID-19 EIDL program and its maximums are very different. First, draw PPP loans came with a maximum loan amount of $10 million. The second round of funding was limited to $2 million. Businesses could calculate their eligible limit by multiplying their monthly payroll costs by 2.5, or by 3.5 if in the food or hospitality industry.
When is the deadline to apply for EIDL funding for COVID-19 relief?
COVID-19 EIDL applications must be submitted by December 31, 2021. However, you can still request additional funds after the deadline. If you borrowed less than you were offered and subsequently changed your mind, you have two years after the loan promissory date.
Navigating your company’s finances during a pandemic or other disaster is complicated. You can make it a bit easier by comparing several small business loan options with one simple online form.
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