Need more money? SBA gives struggling businesses another chance to participate in the EIDL program
For many American small business owners, who have asked federal relief funding during the early days of the Covid-19 pandemic, it was a happy surprise to learn that their economic pictures did not darken as much as they thought, or that their pivotal planning paid off. For many others, things got worse.
In late September, the US Small Business Administration quietly began allowing those who had already applied economic disaster loans (EIDL) to request more funding. They can now get an increase of up to six months in working capital, as long as total expenses do not exceed the current cap of $150,000.
The additional funding could act as a bridge for some businesses in need, especially as another Recovery plan before the end of the year seems less and less likely.
To obtain the additional funds, your company must have used or is about to use your paycheck protection and your EIDL funds. You will also need to send an email stating your need to [email protected] with the word “INCREASE” in the subject line. To support your claim, attach documents such as your most recent federal business income tax return, as well as a IRS Form 4506 T 2–a form requesting a transcript of your tax return. In lieu of tax documents, you can include updated financial data – including gross revenue, cost of goods sold, operating costs, or other sources of compensation – and submit form 3502which is an attestation concerning the aforementioned documents.
The initial EIDL approval amount was based on self-certified gross revenue and cost of goods sold. For this additional drawdown, an SBA spokesperson notes that the agency will use tax returns and other financial documents to establish that the six months of economic harm is greater than the original loan amount.
Regarding the EIDL program, it is also worth noting the deadline. The EIDL program existed before the pandemic and normally allows borrowers to access loans of up to $2 million. However, this special pandemic offer, in which companies can apply outside of natural disaster scenarios, will expire at the end of the year, i.e. December 31, 2020.
It is also important to note that if you have received an EIDL and your business is still at risk of closing, you are responsible for returning to the SBA and requesting the money according to the loan agreement you signed. They can deny your request, but you must let them know that your business is at risk of closing.