How to Apply for an EIDL Loan Increase

In the wake of the COVID-19 pandemic and its effect on businesses, the federal government created several programs designed to help small businesses to stay afloat. The EIDL is one such program. Although all funds have been distributed from the COVID-19 allocation, an EDIL increase may be necessary for your business in the future.

If you apply for an EDIL emergency business loan for your business and spend all of the money on expenses but still need a little help, you’re not alone. The effects of economic disaster can linger for longer than we expect. When this happens, you might need to apply for an increased EIDL loan amount. Recent changes to the EIDL loan program have made this possible for your business.

There are specific criteria that need to be met in order to successfully apply for a loan increase, if these criteria are not met, you will not receive an increase to your existing loan. If you have not yet applied for an EIDL loan, you must apply and wait for the loan to be accepted and processed before an increase can be granted.  

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What is an EIDL program?

The EIDL (economic injury disaster loan) program is a long-term, low-interest loan program guaranteed by the Small Business Association (SBA). It is available to small businesses, small agricultural cooperatives, as well as the majority of private nonprofit organizations in areas that have suffered significant economical damage as a result of natural disasters or pandemics.  

EIDL loans are designed to assist small businesses in covering their normal and necessary operating expenses including healthcare benefits and rent and utility bills. The interest rate applied to these loans is not allowed to exceed 4%. The interest rate of the loans is fixed for the duration of the loan and repayment period. The actual interest rate applied to each loan is dependent on whether you are a small business or a private nonprofit organization.

The initial limit for an EIDL loan was $500,000 to cover up to 24 months of economic injury. However, this cap was increased to $2,000,000 during the course of the COVID-19 pandemic. The loan amount can be used to cover business debts as well as expenses, however, it should not be used to expand your business or start a new business.  

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Who is eligible for an EIDL loan?

There are certain criteria that must be met by small businesses to be eligible for an EIDL loan. Firstly, a small business as categorized by the SBA is a business or agricultural enterprise providing employment to fewer than 500 staff. Affiliates are included in the 500 employee limit. Additionally, your small business must be physically located within the United States and have experienced working capital losses due to natural disasters or a pandemic.  

Businesses applying for an EIDL loan are required to have a valid IRS-issued Taxpayer Identification Number. Furthermore, owners, members, or partners in the business that own more than 20 percent of the company must be US citizens, non-citizen nationals, or qualified aliens with a valid social security number.

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Terms of an EIDL loan

As with any loan, an EIDL loan is subject to certain terms and conditions that affect the amount available to borrow and repayment amounts and schedules. Most importantly, the EIDL loans are to be repaid, unlike other government assistance programs that are implemented during times of economic hardship or disaster.  

An EIDL loan has a repayment term of 30 years with a low, fixed interest rate. Interest rates on EIDL loans are 3.75% for small businesses and 2.75% for nonprofit organizations.  

The maximum loan amount available is $2,000,000. Collateral is required for loan amounts in excess of $25,000 and a personal guarantee is required for loan amounts exceeding $200,000.

Repayments are deferred automatically for 30 months with interest accruing at the relevant fixed rates above throughout the deferral period. There is no penalty for prepayment of an EIDL loan so it is possible to pay back larger chunks during busier periods for your business. 

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Who can apply for a loan increase?

It is important to know that you need to already be a participant in the program before you can apply for an increased loan amount. When you first apply you will be eligible for the lower amount which can later be increased.  

An increased loan amount should be considered if your small business is struggling to pay your necessary bills or your economic injury exceeds the base loan amount of $500,000. If you already have an EIDL loan, you can submit a request to increase your loan to your maximum eligible amount. This is only possible while government funds are available. 

The maximum amount that you can apply for varies depending on your eligibility. The current EIDL program determines the maximum loan amount based on how long you have been in business. If your business began operation after January 1, 2019, the SBA will calculate your maximum eligibility internally. However, if your business was in operation prior to January 1, 2019, your maximum eligibility can be calculated with the below formula:

(2019 Gross Sales - 2019 Cost of Goods Sold) x 2 = maximum loan amount.

How to apply for a loan increase

If your business has an existing loan and requires an increase in funds, you can apply via the SBA loan program online. 

It is important to note that you should apply for an increase through the EIDL online portal rather than submitting another loan application. There should only be one loan application per business.  

An application for a loan increase can be made in 5 easy steps using your EIDL program account.  

Firstly, log into your SBA EIDL portal account. Remember, do not begin a new loan application. Once logged in, find the Status section of your account dashboard. Within this section, select Request more funds.

There will be questions to answer in this section of the portal. It is important to ensure that you answer these questions properly and truthfully in order to access an appropriate increase in funds. At this stage, submit any documentation required, you will be prompted on which documents are required in the portal.  

Finally, enter your loan increase request amount. Remember, if your business was operational prior to January 1, 2019, you can calculate your maximum loan amount beforehand. If you are unable to calculate your maximum loan amount, the SBA will be able to do so internally, in this case, enter your desired loan increase amount. The increase you receive in this instance may differ from your request amount depending on eligibility.

Alternative methods to apply for an increase

In some cases, the request more funds button will not be available in your SBA portal dashboard. This does not mean that you are not eligible for an increase in your loan amount. In the event that you do not have access to the request more funds button, you can contact the SBA via email to request a loan increase.

It is important that your email appropriately identifies your business and your reason for emailing. To do this, ensure that the subject line includes the phrase, EIDL Increase Request as well as your 10-digit application number from your initial loan application.  

The body of your email should contain all the information required for the SBA to identify your business. This will include things such as your application number, loan number (provided that your initial loan request has been approved), the name and address of your business, the registered business owner’s name, and a phone number that you can be contacted on.  

Do not include any financial documents or any other attachments in your email. The SBA will be able to tell you which documents they require should you be eligible for a loan increase. Sending documents preemptively can cause confusion and ultimately lead to delays in processing your loan increase request.  

Final thoughts

EIDL programs can be incredibly beneficial in protecting businesses and the economy in the event of natural disasters and events such as pandemics. The recent updates to such loan programs, including the massive increase in the amount of money a small business can borrow and the fixed, low interest rates, make them even more useful when they are needed.  

It is important to remember that even though the maximum loan amount has increased, there is a limited amount of funds available from the government. Therefore, the sooner you apply for the increase if you need it the better. Once the allocated funds have been distributed, they are not replenished unless the economical injury is likely to be prolonged for everyone.  

Your check stubs can be a great way for you to keep track of your finances so you can easily add the figures to your spreadsheet.

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