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Florida CF Group
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The $500,000 Question: How to Increase Your EIDL Loan Amount

March 31, 2021
| By: Carl Falletta

Beginning April 6, small businesses and non-profits can apply for an increase to their COVID-19 disaster loans up to a maximum loan amount of $500,000. Now is a good time for business owners to start preparing a “Request for Increase” application to the SBA.

Applicants that already accepted a loan calculated under the previous guidelines have up to two years after the date of issuance to ask for additional funding, according to the SBA.  To be eligible, your business must be experiencing a “business loss” related to COVID-19. The business receiving the loan must be deemed a Small Business based on North American Industrial Classification System (NAICS) code, annual receipts, and the average number of people employed per pay period (SBA’s size standards).

EIDL proceeds must be used for certain purposes. Acceptable purposes include working capital, paying fixed debts, payroll, accounts payable, and paying other bills that could have been paid had the disaster not occurred.

To be eligible for an increase, your business needs to have used, or be close to using up, its paycheck protection and EIDL funds and must be able to demonstrate economic injury.

A request for increase must contain significant new information that was not required in the original application. The SBA has not issued guidance yet on how an entity should go about making the request, BUT the SBA does offer forms that may be helpful.  

Information and Documents to be Included:

  • SBA Form 5 or Form 3501
  • SBA Form 3502
  • Ownership breakdown, entity structure chart including, EIN, percent of ownership, and Managing Partners, equaling 100% ownership of the entity.
  • Government ID, front and back for each owner and/or Managing Partner.
  • IRS 4506T for the entity which must be signed by an officer, owner or partner that is deemed to have authority by the IRS (i.e., President, Managing Partner, Owner, etc.).
  • Latest filed Tax Return for the entity.
  • Image of a voided check for the entity.
  • SBA Form PFS 413 completed, signed, and dated by the applicant, each principal owning 20% or more of the applicant business, and each general partner or managing member.
  • SBA Form 2202: Schedule of Liabilities listing all fixed debts, completed, signed, and dated by the applicant.
  • SBA Form 1368 providing monthly sales figures will generally be required when requesting an increase.
  • P&L 2019 – 3/31/2021

An SBA spokesperson noted that the agency will use tax returns and other financial records to determine if six months of economic injury is greater than the original loan amount for this additional draw.

Form 1368 will become the basis of your request for increase.  The SBA has defined the Injury Period due to COVID-19 as being 24 months, approximately March 2020 through March 2022. Form 1368 records historic revenues prior to the injury period and through the injury period.  All revenues to date are actual and you will be required to forecast revenues for future periods.  Form 1368 also documents actual and forecasted expenses.  The difference between what the (forecasted) actual revenues “due to COVID” as compared to historic revenues, less actual expenses is the "Amount of Economic Injury" that the SBA will consider for an increase. 

All documents will need to be attached to an email individually in a PDF format, clearly named by including the form number when applicable.  Once the documents are prepared, they can be submitted by putting INCREASE EIDL Loan Number ##  in the Subject Line of the email to: pdcrecons@sba.gov.  You will receive a confirmation email once the SBA has received your request.

For the SBA to approve an increase request, it is important to submit a “complete application.” Experts with Florida CFO Group can prepare all the documentation, projections, and narratives that you will need to ensure a favorable outcome.

Good Luck!

Carl Falletta

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