Breaking: Here's How SBA Loan Officers Make EIDL Decisions

eidl Oct 15, 2021

Recently, we received insight into the process that SBA loan officers use to determine whether or not to approve or deny EIDL loans, in particular EIDL loans over $500K. Previously, the SBA stated that the total amount businesses could qualify for was based on their 2019 revenue and the cost of goods sold (COGS), but now we have more insight into the decision-making process. Here's what you need to know.

SBA Uses Revenue and COGS to Decide Potential EIDL Loan Amount

The SBA calculates your total possible EIDL loan amount based on your 2019 revenue and your cost of goods sold. You can check the total amount you qualify for by using the calculator on your Skip dashboard, or sign up here. However, that does not mean that you will be approved for that amount.

Businesses have been denied their total requested amount for various reasons, such as "lack of repayment ability." Until now, it was unknown why these businesses were being denied.

SBA Uses Cash Flow Analysis to Determine Your Repayment Ability

In addition to the total eligible loan calculation, SBA loan officers use a cash flow analysis to determine the EIDL amount you qualify for, specifically if you will be able to repay the EIDL amount you are requesting. Some SBA loan officers have been denying applications with no further input. Others have been proactively telling business owners what they do qualify for.

When calculating your ability to repay the requested EIDL amount, SBA loan officers begin with your 2019 net income, depreciation, and duplicated interest. This information will be on your 2019 business tax return. Many businesses will have zero depreciation and duplicated interest, but some may.

In addition, loan officers take into consideration your annual business debt service (which is the current debt of your business as reported on your schedule of liabilities), personal income, personal debt, and the total EIDL loan amount requested. The SBA uses all of this information to determine whether or not you will be able to pay the EIDL monthly payment for the amount that you requested.

📌 Pro-tip: Join Skip Premium today and get 1-1 EIDL support as well as access to the EIDL cash flow analysis calculator.

SBA Does Not Expect To Run Out Of EIDL Funds Before the Program Ends  

In a September press release, the SBA announced that there was around $150 billion left in the EIDL pool and reiterated that the EIDL program will stop accepting applications on December 31, 2021, unless funds run out. As of today, the SBA does not anticipate running out of EIDL funds. A loan officer reported that the SBA would have to award $2.5 billion per day in order to run out of EIDL funds before the program expires. The SBA does not foresee this happening.

That is wonderful news for the tens of thousands of businesses that are still waiting for a decision on their EIDL loan or loan increase. According to a recent survey we conducted with nearly 2K responses, nearly 60% of businesses are still waiting on a decision on their EIDL loan or increase and only 20% have been approved.

Get Personalized EIDL Help

If you want to get personalized assistance with your EIDL application– with reconsideration, collateral requirements, or getting approved, book a time to speak with a member of our team. There is currently a waitlist of nearly 4,500 people, but you you can skip the wait list completely with this invite link. In addition to one-on-one assistance, you'll be able to use the cash flow analysis calculator to see what your actual EIDL approval amount might be.

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