UPDATE: As of April 24, 2020, the federal government approved replenishment funding for the EIDL program by way of the Paycheck Protection Program and Health Care Enhancement Act. Learn more: https://www.cricpa.com/additional-funding-ppp-eidl-relief/

Please note that if you have already submitted your application, that the SBA is continuing to process those applications on a first-come, first-served basis.

 

During the holiday season each year, if you’re like most people, Christmas morning can’t come soon enough. You wait with eager anticipation, hoping that the days will quickly pass so that the big reveal can finally happen.

For those who have been awaiting word on their Economic Injury Disaster Loan (EIDL), you may feel much the same way, and find yourself asking the following questions:

  • Is my $10,000 emergency advance in process?
  • When will I hear back from the SBA?
  • Will I be approved for the loan, and if so, how much will it be?
  • If I am approved, how long will it take to receive the funds for my business?

While all questions may not be answered yet, there is a bit more information being made available to help you at this point.

According to the SBA, contrary to the word on the street that by mid-April the potential $10K emergency advances will not have gotten through the pipeline, they are indeed imminent. The disaster loan process was designed around business needs following a natural disaster and not to deal with a pandemic like the COVID-19 virus. The SBA systems have been overwhelmed by the relief requests, resulting in processing time much longer than the 3 days stated on the EIDL application and the SBA website, but the advances should be arriving any day now. The SBA has now said that the advance amount will be determined based on the number of employees at a rate of $1,000 per employee up to a maximum of $10,000 for the business. To check on the status of the advance, an applicant can contact SBA Disaster Customer Service at 1-800-659-2955 or via e-mail to disastercustomerservice@sba.gov.

You must have your EIDL application number for your inquiry.

By the same token loan, processing has been moving much more slowly than normal, but SBA loan officers are being assigned to each application as their workload allows. And the loan amounts and terms are a bit different than many originally thought. The SBA now indicates that the EIDL amounts will be determined in a couple of different ways based on their typical disaster loan determination methodology:

Phase I method – This method involves using annual sales minus cost of goods sold. This “gross profit” amount is divided by 12 to arrive at a monthly amount and then multiplied by 4. Phase I eligibility cannot exceed $300,000. If the computation results in a larger amount, or if the applicant needs more than $300,000, the SBA loan officer will move on to Phase II.

Phase II method – In Phase II, the loan officer will make adjustments to the economic injury calculation by performing a balance sheet analysis, identifying extraordinary items, receivables, and inventory that are considered “frozen” and also by considering any accelerated debt. The loan officer will compare normal sales revenues to the injury period sales and calculate the total financial needs of the business. The only criteria for calculating needs is that the need has to be essential to the continued viability of the business.

So while you may not have to wait until December to have your EIDL funds in hand, it will be helpful to be as patient as possible. If you have already applied for the EIDL funding, you should hear from the SBA as the loan officers work their way through the overwhelming process of handling the many applications that have been filed. If you have not yet applied, consider taking action soon to be in line for a potential advance and a loan.

Hopefully, when you do receive your funding, it will seem like Christmas has come early this year!

For more detailed guidance regarding Economic Injury Disaster Loans, please contact your CRI professional.