NEW $2 MILLION SBA EIDL Loan Increase & Elegible Expenses Changes (Step by Step Instructions)
The SBA has just announces mayor changes to the SBA Covid-19 EIDL Loan. There is a new $2 Million increase amount cap, there are new elegible expenses for the SBA EIDL loan funds, and other SBA EIDL Loan program changes. In this video we discuss all the changes to the SBA EIDL Loan and provide step by step instructions on how to apply for this new $2 Million SBA EIDL Loan increase.
This video is intended for education purposes and should not be taken as legal or tax advice. You should consult with your financial professionals about your unique financial situation before acting on anything discussed in these videos. Freedomtax Accounting and Multiservices Inc. is providing educational content to help small business owners become more aware of certain issues and topics, but we cannot give blanket advice to a broad audience. Freedomtax Accounting and Multiservices Inc. or its members cannot be held liable for any use or misuse of this content.
The SBA has just announced major changes to the SBA EIDL loan, there’s a new $2 million increase limit. And there are also changes on how you can use the loan. In this video, we’re going to show you step by step how to apply for this increase, and we’re going to discuss the changes. So that’s what we’re going to talk about in this video.
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Now, as mentioned, the SBA has just announced a major change to the EIDL loan program.
The changes are the following:
The biggest one and increase on the EIDL cap. Now instead of the $500,000 limit, there’s a new $2 million limit. Okay.
There’s also a new deferment payment period. It says here that they’re going to ensure a repayment period of two years after getting the loan.
Now, if you got your EIDL in 2020, you already have a two-year deferment period. The current law says that if you’re getting your EIDL loan in 2021, you only have an 18-month deferment period. According to this, now, even if you get your EIDL loan in 2021, you now also have a two-year deferment period. It also says that they are establishing a 30-day exclusivity window, where for the next 30 days, the SBA is going to only process loans that are $500,000 or less. So apparently, if you want this $2 million loan increase, you’re going to have to wait another 30 days for the SBA to start processing your application. Now also, this is another big change on the EIDL loan basically, an expansion of eligible use of funds. funds will now be eligible to prepay commercial debt and make payments on federal business debt. This is why the past rules on the EIDL loan said that if your business had prior loans, you could not use the EIDLs funds to pay off those loans. Now you can and this is a big opportunity for small businesses to basically refinance that that they already have. For example, let’s say that you are a truck driver, and you have a truck that still owes $80,000. Okay, and right now you have a five-year loan on $80,000 with a 7% interest. Now, if your business has that look that you can now use the AI do loans funds to pay off the $80,000 truck loan. So now you’re basically refinancing your current loan to a 30-year loan with a 3.75% interest rate. So, this is going to be a lot of help for small businesses. Okay. Also, apparently, they are going to make the approval process a lot simpler. I think that they are behind on approving SBA loans. Apparently, they want to make that process a lot faster. And they are going to make changes to make the approval process a lot faster.
Now, how do you apply for the new $2 million dollar loan? If you haven’t applied for an EIDL loan in the past, then you have to do a new application, basically you go to the SBA website. You scroll down to where it says “EIDL” and you click this red button that says “apply” here. And that takes you to the application, right and you basically do this application and start the process if you already received the EIDL loan. Even if you already received that increase, you can now apply for a new increase. Okay, so you have to log in to your SBA account, or right go to the portal and login. Once you log in, you’re going to go to your portal, and then you’re going to see a blue button that says request more funds. You click that, and it takes you to this page where it says, if there has been any change of ownership or bankruptcy in the business, you have to tell them here. If there are no changes here, you basically put no change. here says select form. When you click Select form, you will see a drop-down menu. Here you select your business tax filing requirement. If it’s a Schedule C, a partnership, an S-corp, a C-corp, you click your filing requirement. And then you basically click okay. Once you click okay, you’re going to be taken back to the portal. Okay, and you’re going to see these two green boxes.
Now at this point, you need to log out of the portal, wait like five minutes or 10 minutes, log back in. And now you’re going to see this, you’re going to see these red letters that says change amount, you click Change amount. And again, we’re going to see this bar, okay. Now, this particular client, based on his sales, does not qualify for the $2 million. But if you do qualify for the $2 million, instead of this number, you are going to see $2 million here. So, you basically choose the amount you want. Remember that once you start selecting the amount, here you’re going to see your monthly payment. So, you can choose the amount that you want, then you keep scrolling down, and you click “Accept”. And basically, you’re done. Okay, and the SBA will now process your increase application. Apparently, according to our sources, and SBA, if you want the $2 million increase, it is not going to be that easy. They’re going to ask for a lot of documentation. Our sources tell us that they’re going to ask for your schedule of liabilities. Okay, basically, you need to detail all your business liabilities in this form. You can go to your financial statements, look at your balance sheet, your balance sheet has all this information. If you don’t have it, contact your CPA, so he can give you a copy of your current balance sheet. Okay. So, you know what information to put here. They’re also going to ask for a resolution of certification. Right? So here is the you have to put your SBA application number, your SBA loan number, your business, the name of your business, the name of their business again, the total amount of the loan that now you’re going to want, you’re going to have to list the owners or our directors of the business name, their titles, your business name again, and then your name, their title, your signature, and the date.
Also, apparently this is big, because this is going to make a lot of people mad. Now they’re going to make you fill out this form of the list of the collateral the SBA is going to use for the $2 million. No, they are going to need the business assets and the assets of each owner. So, if the business has real estate, if the owners have real estate, any assets that they have, they are going to have to disclose all the assets that the business has and all the assets. The owners have a right. Apparently once again, this is according to our SBA sources. Apparently, if your collateral Does Not Meet $2 million, because apparently, you’re going to need $2 million in collateral in order to get the $2 million increase. Okay, that now, we still don’t know if that is official, but according to our source that they have been pretty on point. Apparently, you’re going to have to show that your business and the owners have at least $2 million in assets to cover the $2 million collateral needed. Okay. Also, each owner is going to have to do a personal financial statement. So, you’re going to have to talk to your CPA, and each owner is going to have to fill this out, this is going to be a personal financial statement. So, as you can see, getting the $2 million increase is not going to be as easy as the other increases in the past.
Now, it is going to be more difficult, but it is not anything out of the ordinary because if you go to any bank to get a 2-million-dollar loan, the bank is going to ask for a lot more documentation than the SBA is asking right now. Okay, so it’s nothing out of the ordinary to get a $2 million loan. Right.
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