The SBA has said they plan to finally announce new EIDL rules and loan limits after Labor Day. According to sources, the new EIDL rules will change the current EIDL loan limit from $500,000 to $2,000,000 as well as expand eligible uses of EIDL loans.
As the new EIDL rules are set to go live, there are several common questions we hear over and over again that often don't have straightforward answers. 5 of these questions are below — questions we can also help you answer with our personalized concierge team. We've opened up a very limited number of spots for Labor Day Weekend — check availability and book a spot to talk with us.
Are you eligible for an EIDL increase and if so, for how much?
The new EIDL loan rules will generally keep the same EIDL loan calculation formula — 24 months of working capital based on your 2019 income. Chances are if you've received an EIDL increase already and have hit the maximum loan amount — $500,000 — you'll be eligible for an increase.
However, there are exceptions to this, as well as additional collateral that the SBA will require to take higher loan amounts. Our concierge team can help you understand your increase options and any additional documentation you may need to submit or have on hand.
Is it the best decision to increase my EIDL loan amount or not?
Despite the most competitive business loan interest rates in the country — 3.75% for businesses and 2.75% for non-profits — it's important to remember this is still interest that is accruing as soon as you sign closing documents.
Depending on your business and hiring needs and growth projections, it's important to understand implications of taking on too much capital. Should you borrow more than you need now while interest rates are low or borrow only what you need now? For example, daily interest on the $500,000 loan averages out to over $70 per day.
What should you do if you're in EIDL reconsideration or have been denied?
According to our latest YouTube poll, 50% of EIDL applicants have been denied or are applying for EIDL loan reconsideration. Chances are good that you may be at this step of the process: You need to first get approved for your original loan increase and you have questions about how to navigate that and potentially speed things up. Our team can help you with the reconsideration process and answer questions along the way — and then help you look toward additional funding via the EIDL program or other funding programs.
How can you use the expanded uses of EIDL funds to help your business even if you don't take more funding?
There's another benefit to forthcoming EIDL changes: Increased eligible uses of EIDL funds. While the new rules are not 100% official yet, it's expected that EIDL recipients will be able to use EIDL funds to pay off business credit card debt and certain types of other debts associated with your business.
In the case where you may have other business loans that have higher interest rates — and that are eligible under the new rules — this could save your business thousands or more in interest expenses as a result of these new rules.
What are other funding options that may complement EIDL loans?
Finally, there's the question of other funding options and how they compare to EIDL loans: When should you consider private funding options, such as lines of credit versus other business term loans. This also relates to your current cash needs — do you need all of the money now or do you just want to draw on it when you need to, and avoid interest accruing? These questions also can make a difference in thousands or tens of thousands in interest expenses for your business. In addition, it relates to your business credit rating and ability to get more business funding in the future.
Final thoughts on EIDL 2.0
In some way, shape, or form, these new rule changes will affect your business and business funding. We highly recommend considering getting personalized help to talk through your specific situation if you're serious about appropriate funding for your business. Check availability and book a spot to talk with us today before the spots fill up.
