Section 1: COVID EIDL Program Information
|Product||Loan directly from SBA that must be repaid. Low-interest, fixed-rate, long-term loan to help over come the effects of the pandemic by providing working capital to meet operating expenses|
|UsesofProceeds||Normal operating expenses and working capital|
|Loan Term||30 years|
|Interest Rate||Businesses: 3.75% fixed
Private non profit organizations: 2.75% fixed
|Payment Deferment||Payments can be deferred for 18 months for loans made in 2021. No penalty for prepayment.|
|Fees||$100 UCC Filing Fee for loans over $25,000|
|Collateral||Required for loans greater than $25,000|
|Personal Guaranty||Required for loans greater than $200,000|
1. What is a COVID EIDL loan?
COVID EIDL loans are different from regular Disaster Loan Program loans. “COVID EIDL” stands for COVID-19 Economic Injury Disaster Loan. In response to the COVID-19 pandemic, SBA was given the authority to make low-interest fixed-rate long-term COVID EIDL loans to help small businesses and other entities overcome the effects of the pandemic by providing borrowers with working capital to meet ordinary and necessary operating expenses.
2. What are the loan terms?
Loan or Grant
A COVID EIDL loan is a loan that must be repaid. Unlike Paycheck Protection Program loans, a COVID EIDL loan is not forgivable.
Interest Rate and Term
- Businesses: 3.75% fixed for 30 years
- Private nonprofit organizations: 2.75% fixed for 30 years
- Payment Deferral: The loan term is 30 years; payments are deferred for the first 18 months (during which interest will accrue), and payments of principal and interest are made over the remaining years. You may make prepayments at any time without penalty.
- $0 – $25,000: No collateral required
- $25,001 – $500,000: Security agreement (UCC-1) required on business assets (no lien on real estate unless as an accommodation to the applicant)
- $0 – $200,000: No personal guaranty required
- $0 – $200,000: No personal guaranty required
$200,001 – $500,000: All loans require a full personal guaranty from all individuals or entities owning 20% or more of the applicant business. If no single owner owns 20% or more, then at least one individual or entity must provide a full guarantee
Repayment ability of for-profit businesses will be determined by the owner’s credit score (minimum of 570)
- An acceptable credit score will satisfy the underwriting requirement for repayment ability
3. Does interest accrue during the deferment period?
4. What can I use the loan proceeds for?
Borrowers may use COVID EIDL working capital loan proceeds to make regular payments for operating expenses and to pay business debt incurred at any time (including business credit card debt), payroll, rent/mortgage, utilities, and other ordinary business expenses. You may not use the funds to expand your business.
5. Can this loan be forgiven?
Section 2: Submitting a New COVID EIDL Application
6. What is the deadline to file an application?
The last day that applications may be approved is December 31, 2021. Be sure to file your application as soon as possible to allow processing time for approval.
7. When should I apply?
You should apply once you are ready to submit all relevant documentation (see “What documents do I need to apply” below).
8. What small businesses are eligible for COVID EIDL?
- Small businesses that, including affiliates, have 500 or fewer employees
- Sole proprietorships and independent contractors
- Cooperatives that, including affiliates, have 500 or fewer employees
- Employee Stock Ownership Plans (ESOPs) that, including affiliates, have 500 or fewer employees
- Tribal small business concerns with 500 or fewer employees.
- Agricultural enterprises with 500 or fewer employees
9. What non-profit organizations are eligible for COVID EIDL?
- Most privately owned non-profit organizations, including religious non-profits, are eligible regardless of size if they meet the other program eligibility requirements
10. What other eligibility requirements are needed to apply for COVID EIDL?
- Credit score of 570 or above
- In business or evidence of investment to be in business on or before January 31, 2020
- All owners of 20% or more of the business must have one of the following:
If the owner is a legal entity
Employer Identification Number (EIN)
If the owner is an individual
- US citizenship with either Social Security Number (SSN); or
- Non-US citizen who resides in the U.S. and is classified as a “non-citizen national” or “qualified alien.” Qualified aliens include permanent residents with a current green card
11. Can I apply for COVID EIDL funds to start a business?
No, your business must have been in operation or have evidence of investment to operate on or before January 31, 2020.
12. Am I eligible if I received assistance through PPP, RRF, SVOG, or other relief through SBA?
Yes, other assistance received through SBA will not impact your eligibility or loan amount, as long as the other assistance did not fully compensate your economic injury.
13. What documents do I need to apply?
If you were “in operation” before Jan. 1, 2020
- 2019 Federal Income Taxes for the applicant business (required)
- 2020 Federal Income Taxes for the applicant business (if available)
- IRS Form 4506-T (You will complete this online when you apply)
If you started being “in operation” on or between Jan. 1, 2020, and Jan. 31, 2020:
- 2020 Federal Income Taxes for the applicant business (if available)
- If 2020 Federal Income Taxes for the applicant business are not available, you must submit internally or externally prepared business financial statements including balance sheet and profit and loss statement.
- “In operation” includes businesses that were in an organizing stage but had not yet opened for business. Evidence that you were in an organizing stage includes business licenses, contractual agreements, purchase orders for machinery and equipment, advertisements, and employment classified ads. You may be asked to provide this documentation to prove your business was in operation on or prior to Jan. 31, 2020.
14. How much can I borrow as a small business?
Your maximum loan amount is determined by a formula based on business type and date you began operations.
15. What lines on my tax return should I use to enter my gross receipts, cost of goods sold, or expense information on my COVID EIDL application?
The lines used for gross receipts, costs of goods sold, and expenses vary by the entity tax return type. LLCs should follow the instructions that apply to their tax filing status in the reference periods.
Costs of Goods Sold
|Self-employed||1040 Schedule C||Line 1||Line 4||N/A|
|Self-employed||1040 Schedule F||Line 9||N/A||Line 33|
|C-Corporation||1120||Line 1a||Line 2||N/A|
|Cooperatives||11201-C||Line 1a||Line 2||N/A|
|Partnerships||1065||Line 1a||Line 2||N/A|
|Privately owned nonprofit org||990||Line 12||N/A||Line 18|
|Privately owned nonprofit org||990-EZ||Line 9||N/A||Line 17|
16. What can I do to speed up the processing time of my application?
You can reduce the total time if takes for your application to be reviewed by responding quickly to SBA requests for applicant information, signatures, and approvals. This allows the review team to move your application through each processing step faster.
Section 3: Submitting a COVID EIDL Increase Application
17. Can I apply for additional loan funds if I already received a COVID EIDL loan?
Yes, you can apply for an increase up to the amount you qualify for or the $500,000 cap, whichever is lower.
18. How do I request an increase to my loan?
You can contact Thor Capital Group at 888-445-1028 or email them at [email protected] to request an increase.
The amount of loan increase that you are eligible for is determined by the loan amount that you would be eligible for if you applied today minus the loan that you have already received. You may apply for an additional increase even if you have already applied for and received a loan increase.
- For example, if you are eligible for a $500,000 COVID EIDL loan today, but your current COVID EIDL loan is $300,000 (either because your maximum loan amount was capped in the past or because you elected to take less than the full amount), you are eligible to request an increase of $200,000.
Section 4: Declined COVID EIDL Applications
19. If my COVID EIDL application was declined, is it possible for me to correct any errors to re-apply?
Yes, Thor Capital Group can assist with declines for any reason as long as the applicant meets the requirements of the loan. You can email them at [email protected] for any questions you may have.
20. What are the most common reasons for decline?
The most common reasons for a decline include
Unsatisfactory credit history
Credit score does not meet minimum credit score requirement. You may request reconsideration to reactivate your application and submit additional financial information to demonstrate repayment ability.
There are three main reasons that applicants are declined for unverifiable information:
- During the review process there were one or more items that were reviewed that caused the SBA to question the validity of certain information in the application. This can occur as a result of a failed identity verification, international IP address, client device associated with fraud, or high-risk IP address. If you do not respond within 7 days to a request for additional information from SBA, your application may be declined. You may request a reconsideration to reactivate your application and submit additional information.
- Federal law limits loan amounts to the same borrower, together with its affiliates, to $2M. SBA was unable to approve the application because the business, together with its affiliates, has reached the $2M limit. You may request reconsideration to reactivate your application if you believe that assessment may have been in error.
- Federal law limits COVID EIDL to small businesses only. To be eligible for a COVID EIDL, generally an applicant must not exceed 500 employees or the SBA size standard for its industry. Applicants that do not meet the requirement to be a small business are declined. If you disagree with the decision, you may request reconsideration to reactivate your application and request a formal size determination by completing SBA Form 355.
Ineligible non-US citizen status
Owners of 20% or more of the applicant business must be US citizens, non-citizen nationals, or qualified aliens. If you believe this determination was made in error you may request reconsideration to reactivate your application and submit additional information to substantiate owner citizen, non-citizen national, or qualified alien status.
Business activity not eligible
SBA regulations for an eligible business activity. Ineligible business activities include but are not limited to:
- Pay Day Lending
- Check Cashing
- Gambling, including Casinos
- Adult Entertainment
- Pawn Shops
- Real Estate Developers
- Insurance Company
- Illegal activity under federal, state, or local law such as a Marijuana Shop
Economic injury not substantiated
There are two possible reasons for this decline:
1) The economic injury (gross receipts minus cost of goods sold) is less than the amount received for the EIDL Advance; or 2) The information submitted does not indicate an economic injury. If you believe this assessment was made in error or that there was a mistake on your application, you may request reconsideration to reactivate your application and submit additional information to substantiate your business’ economic injury.
Failure to respond
In order to complete a review and make a decision on your application, SBA may request additional information such as a photo i.d. or legal documents. If you do not respond to the request for additional information within 7 days, the application will be withdrawn with a status of borrower did not wish to proceed. You may request a reconsideration to reactivate an application within a reasonable period of time pending funds available.
Section 5: Loan Application Status
21. How long will it take for my loan increase application to be reviewed?
The SBA has invested in additional personnel and improved processes to increase the number of loan increase applications that are reviewed each day.
22. How will I receive my approved COVID EIDL loan funds?
When your application is approved, SBA will provide you with loan documents that must be completed and signed. Be sure to keep a copy for your records. Loan proceeds are electronically deposited to your bank account within 5-10 business days of the time that SBA receives your completed loan documents.
23. What do I do if my loan application was approved, but I have experienced a significant delay in receiving the funds?
It is possible there is an error with the bank account information you submitted. You can contact Thor Capital Group or email [email protected] for any questions you may have.
Section 6: Post-Disbursement of COVID EIDL Loan Funds
24. What are the program’s record keeping requirements?
You must retain tax returns and financial records for all loan funds spent for 3 years
25. If I’ve already received a COVID EIDL loan and I’ve been affected by another disaster such as a flood, can I ask for more funds?
If you are in an area that has a Disaster Declaration, which includes disasters such as flooding, storm damage, wildfires, or earthquakes, you may be eligible for additional SBA Disaster Loans to cover damage to your home, personal possessions and/or business.
26. If I get another SBA disaster loan due to a different disaster event, can I consolidate the new loan with my COVID EIDL loan? Or can I use it to pay off the COVID EIDL loan?
No. Each SBA disaster loan is a separate loan. They cannot be consolidated. If you qualify for another SBA disaster loan due to a different declared disaster in your area, the new loan must be used for the purposes listed in your loan closing documents, which may include working capital or physical damage repairs. The terms and conditions of other disaster loans may be different than those of the COVID EIDL loan.