EIDL application and loan update.
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To our valued clients,

The Economic Injury Disaster Loan (EIDL) application and the process as a whole continue to evolve. While the EIDL loan (outside the advance) is not forgivable at this time, there may be an opportunity as funds are available to use this working capital loan with the favorable terms that it provides. The terms are remaining the same, which is up to a 30-year loan with rates at a maximum of 3.75%. Below is additional information that we are gleaning from the Alabama Small Business Development Center (AL SBDC) and also current applicants:

EIDL Advance:

  • It is determined to be based on $1k per employee (and/or potentially self-employment person) capped at $10k.
  • As it stands currently if a small business has a PPP loan, the EIDL advance will be deducted from the forgivable portion of the PPP Loan.
  • If the small business does not have a PPP loan, the advance will be forgiven.
  • If more than one EIDL application has been filed per entity, then this could delay the process and be flagged as fraudulent.

EIDL Loan:

  • If you have frozen your personal credit, it must be unfrozen to apply for the loan.
  • After receiving the advance, the initial starting point of the loan process will be a contact from the SBA via email or phone.
  • We understand the initial contact should be through an email address from disastercustomerservice@sba.gov
  • SBA is still ramping up their EIDL staff, so it could be 5-7 days or longer after receiving your advance before contact. Please check your email, spam filters, and potentially voicemail.
  • There is a new expedited loan process. The maximum loan amount is calculated on 12 months gross profit (Revenue minus COGS) divided by 2.  This would be based on what was reported on the application.
    • If the calculation is less than $300K, the loan process is expedited.
    • If the calculation is greater than $300K, an agent will review the application, and additional business and personal information may be required.
  • Upon receiving terms/approval from the SBA, you have up to 60 days before determining whether accepting loan proceeds.
  • We also understand that the loans:
    • Less than $25K would not require a lien of any kind
    • Between $25k and $500k will require a UCC lien on personal property
    • Above $500k could require a lien on personal and real property
    • Less than $200k would not require owner guarantees

Again, this EIDL loan process continues to evolve as more information comes out.  Currently, the SBA’s EIDL web-page shows a “lapse in appropriations”, but based on communications with the AL SBDC, we understand that the SBA will begin receiving new EIDL applications soon.  Please reach out to your Machen McChesney advisor if you need assistance with the loan funding process.  

Best Regards,
Martin D. Williams, CPA,
Managing Partner
Machen McChesney, LLP

Montgomery: 1761 Taliaferro Trail | Montgomery AL 36117


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