EIDL reconsideration: Can you try again after being denied?

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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.

 

Related: Business line of credit vs. loan comparison

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
  • Speculation
  • Multi-level sales distribution
  • Gambling
  • 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 pdrecons@sba.gov 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]

 

Sincerely,

[full name]

The takeaway

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.

 

Learn more:

This article originally appeared on LanternCredit.com and was syndicated by MediaFeed.org.

 

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