Editor’s note: At Lantern, we strive to help you make financial decisions with confidence. To do this, we occasionally feature content that includes information about our partners and their products or services. We do not provide, endorse or guarantee any third-party product, service, information or recommendations—and our opinions are our own.
If you applied for an Economic Injury Disaster loan (EIDL loan) and were denied, you may be scratching your head and trying to figure out why you didn’t get it. There are many reasons your EIDL loan application may have been denied. It could be that your application wasn’t filled out properly (maybe you didn’t calculate EIDL loan amount correctly). Or maybe you didn’t have adequate collateral or you weren’t running an eligible business. But in some cases, you may still be able to prove that you are eligible with supporting documentation. There is a process in place for COVID-19 EIDL reconsideration, so it’s important to know exactly what you need to do. Being prepared may help increase the odds that your SBA EIDL reconsideration application will be approved.
SPONSORED: Find a Qualified Financial Advisor
1. Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.
2. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals get started now.
What happens when you’re denied for an EIDL?
First, the SBA reviews your EIDL application. If it decides that your business is ineligible, it will send you a notification in writing of its denial of your loan application. You will be given the reason for denial. Some typical reasons are covered in the next section.You will have the option to request EIDL reconsideration within six months of being denied.
Potential reasons for denial of an EIDL loan
There are many reasons your EIDL loan application might be denied. These can include the following.
1. You operate an ineligible business
To qualify for an EIDL loan, your business must have 500 or fewer employees. This rule includes agricultural enterprises, private nonprofits, and faith-based organizations, as well as others. Larger businesses are ineligible. What your business does can also render it ineligible. Businesses that are ineligible include those engaged in:
- Illegal activities
- Loan packaging
- Multi-level sales distribution
- Investment or lending
2. You have unsatisfactory credit
The SBA has certain credit score requirements (not published). Note that if you don’t meet those standards, you will also not be eligible for EIDL loan reconsideration.
3. You may have unverifiable information
You may have been denied simply because the SBA was unable to verify some information. In this case, it may be easy enough to provide the details you’re asked for. Just be sure to do so at least seven days before your application is fully declined.
4. You aren’t an eligible US citizen
You must be either a U.S. citizen or a non-citizen national or qualified alien to receive EIDL funds for your business.
5. You haven’t experienced economic injury
If the SBA believes the information you have submitted does not indicate economic injury, your application may not be approved.
6. Character reasons
Another reason you might be denied an EIDL loan if you have a felony on your record in the past five years. Also you won’t be approved if you have ever been engaged in producing or distributing a product or service that has been determined to be obscene by a court, or if you are suspended or debarred from contracting with the federal government or receiving federal grants. If you were denied for any of these reasons, any bid for EIDL reconsideration will probably also be denied.
How do you start the reconsideration process?
You have up to six months after being denied for an EIDL loan to file for a reconsideration. If you’re applying for more than one EIDL loan, you’ll have six months for each of them, based on the date each one was denied. Your reconsideration request should be emailed to email@example.com or mailed to: U.S. Small Business Administration Disaster Assistance Processing & Disbursement Center, 14925 Kingsport Road Fort Worth, Texas 76155. Be sure to include:
- Your application number
- Business name
- Borrower’s name
- Any information required address the reason(s) your original request was declined
- Any additional information that may assist in processing your request
- Most recent federal tax returns for the business, prior to the pandemic
- Tax ID/EIN or Social Security Number
- IRS Form 4506-T, completed and signed
- Copy of a voided check from your business checking account
Along with this information, write a note requesting EIDL reconsideration of your declined COVID-19 EIDL application. The SBA will process your request and may ask for additional information. As a side note: if you were approved for an EIDL loan but not the EIDL advance (up to $15,000 that doesn’t have to be repaid), there’s not a published EIDL advance reconsideration process, but you can address concerns to TargetedAdvance@sba.gov.
How long does reconsideration take?
The SBA hasn’t published information on how long an EIDL reconsideration will take, but with many requests being submitted, you shouldn’t expect a quick response. You can expedite your request by making sure you provide everything above and give clear information on why you should be approved for an EIDL loan.
What would be a good sample reconsideration letter?
Here’s an example of the letter you might send requesting your EIDL reconsideration if you were declined for the reason “economic injury not substantiated.” In this case, you might not have provided adequate financial documentation to prove that your business suffered because of the COVID-19 pandemic in your application. A reconsideration request is your opportunity to rectify that omission.
To whom it may concern:
This is a formal written request for a reconsideration of my application for a COVID-19-related EIDL loan [application number XXXX] for my business, [business name]. I received notice that my application was denied on [date] for [economic injury not substantiated].
I have attached my profit and loss statements for both 2019 and 2020, which show a 40% decline in sales year over year. This information, I believe, proves my company’s eligibility for an EIDL loan.
Thank you for your consideration. Should you need additional information, you can reach me here:
[phone, email, address]
If you can provide evidence that you should be eligible for an EIDL loan, your EIDL reconsideration may be well worth the legwork. If you’re still denied, another option may be to consider getting a small business loan online.
Lantern by SoFi:
This Lantern website is owned by SoFi Lending Corp., a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license number 6054612; NMLS number 1121636. (www.nmlsconsumeraccess.org)
All rates, fees, and terms are presented without guarantee and are subject to change pursuant to each provider’s discretion. There is no guarantee you will be approved or qualify for the advertised rates, fees, or terms presented. The actual terms you may receive depends on the things like benefits requested, your credit score, usage, history and other factors.
*Check your rate: To check the rates and terms you qualify for, Lantern conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender(s) you choose will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
All loan terms, including interest rate, and Annual Percentage Rate (APR), and monthly payments shown on this website are from lenders and are estimates based upon the limited information you provided and are for information purposes only. Estimated APR includes all applicable fees as required under the Truth in Lending Act. The actual loan terms you receive, including APR, will depend on the lender you select, their underwriting criteria, and your personal financial factors. The loan terms and rates presented are provided by the lenders and not by SoFi Lending Corp. or Lantern. Please review each lender’s Terms and Conditions for additional details.
SoFi Lending Corp. (“SoFi”) operates this Personal Loan product in cooperation with Even Financial Corp. (“Even”). If you submit a loan inquiry, SoFi will deliver your information to Even, and Even will deliver to its network of lenders/partners to review to determine if you are eligible for pre-qualified or pre-approved offers. The lenders/partners receiving your information will also obtain your credit information from a credit reporting agency. If you meet one or more lender’s and/or partner’s conditions for eligibility, pre-qualified and pre-approved offers from one or more lenders/partners will be presented to you here on the Lantern website. More information about Even, the process, and its lenders/partners is described on the loan inquiry form you will reach by visiting our Personal Loans page as well as our Student Loan Refinance page.
Student Loan Refinance:
Student loan refinance loans offered through Lantern are private loans and do not have the debt forgiveness or repayment options that the federal loan program offers, or that may become available, including Income Based Repayment or Income Contingent Repayment or Pay as you Earn (PAYE).
Notice: Recent legislative changes have suspended all federal student loan payments and waived interest charges on federally held loans until 01/31/22. Please carefully consider these changes before refinancing federally held loans, as in doing so you will no longer qualify for these changes or other future benefits applicable to federally held loans.
Auto Loan Refinance:
Automobile refinancing loan information presented on this Lantern website is from MotoRefi. Auto loan refinance information presented on this Lantern site is indicative and subject to you fulfilling the lender’s requirements, including: you must meet the lender’s credit standards, the loan amount must be at least $10,000, and the vehicle is no more than 10 years old with odometer reading of no more than 125,000 miles. Loan rates and terms as presented on this Lantern site are subject to change when you reach the lender and may depend on your creditworthiness. Additional terms and conditions may apply and all terms may vary by your state of residence.
Secured Lending Disclosure:
Terms, conditions, state restrictions, and minimum loan amounts apply. Before you apply for a secured loan, we encourage you to carefully consider whether this loan type is the right choice for you. If you can’t make your payments on a secured personal loan, you could end up losing the assets you provided for collateral. Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on the ability to meet underwriting requirements (including, but not limited to, a responsible credit history, sufficient income after monthly expenses, and availability of collateral) that will vary by lender.
Information about insurance is provided on Lantern by SoFi Life Insurance Agency, LLC.
Featured Image Credit: designer491/istock.AlertMe