Tips For Applying For An EIDL Loan & Grant

DoC reader SBA DRS left a comment to our previous EIDL post with some tips. A lot of people are confused about the process, so I thought it was worth passing along. Maybe we’ll get lucky and he’ll visit us here in the comments to answer any other questions readers have.

Here is the unaltered comment:

I am a Disaster Loan Specialist working at SBA, and I handle calls about EIDL and the EIDL Advance all day, nearly every day. I won’t deny that there is definite room for improvement in how SBA has handled COVID-19 EIDL, but it has over 5.5 million applications with only about 2,500 loan officers. It simply isn’t scaled to handle this crisis as efficiently as people seem to expect. So please do me and the rest of us a favor and do the following with your applications and followup:

  1. Understand this program before applying. Even if you are applying only for the Advance, you are still ultimately applying for a loan at the same time. Your personal credit (not business credit) will get pulled… perhaps more than once in the process. It is not meant for expanding your business, relocating, acquiring new equipment, or paying off higher interest debt. It is meant for your operational expenses during the disaster (think rent, payroll, supplies, utilities, and monthly payments). This holds true for the Advance as well. It’s not supposed to be free money for you to spend on whatever you want.
  2. Understand the Advance. It is not an automatic, free $10K for everyone. You can serve as an armchair attorney if you want to dispute how it’s supposed to work, but nevertheless, SBA will give you $1K per number of pre-disaster employees listed on the application. That’s actual employees… not independent contractors. If you’re taking PPP funds, then the Advance has little-to-no purpose for you since it will reduce your PPP forgiveness. And finally, despite SBA’s best intentions, it may not land in your account as fast as you want, so don’t pin your business’s hopes and dreams on it.
  3. Check the Advance box. This may sound like a no-brainer, but every day, I hear from people who expect their Advance but their application doesn’t reflect that they ever requested it. Those folks usually want us to somehow change that on the application, but the reality is that it is highly unlikely that will ever happen.
  4. Review all your data carefully. It may sound like it would be easy to change information at the drop of the hat, but SBA is a medium-sized bureaucratic agency in the midst of a crush of application. A mistyped email address or piece of bank information will cause you a lot of grief, and it may take weeks to change anything listed on your application or resend money. It amazes me that someone who owns a business would send in an official application full of errors… but it happens all the time.
  5. Be patient. Calling customer service probably won’t affect any change to your application or Advance status. Agents can’t usually do much but document your concern, so you’re probably better off keeping your chill and waiting for an email or bank activity to understand your application status. (I can understand a once-a-week call or less after a couple weeks or so, but every day… no!)
  6. Don’t take your frustration out on phone agents, and don’t demand to speak to a supervisor. If the phone agent can’t help you, 9 times out of 10, no one in customer service can. You can’t speak to a loan officer because they’re too busy processing applications to do applicant/borrower outreach. There are nearly no exceptions to that rule, so don’t be angry when you aren’t one.

I don’t intend to sound cocky here, but these are simple pitfalls and realities of this program, and they make up the majority of my day. If you know them up front, it will make them a lot easier to handle for everybody involved.

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Frank

Apparently the GRANT money has run out so if you take the loan now, you MUST repay it.

Avi
Avi

Frank The EIDL loan always had to be repaid. The EIDL grant is separate, and yes, that money has run out. It was PPP loan that could be forgivable if used in certain ways.

Tu Phat
Tu Phat

Hoping SBA DRS could weigh-in on this:

I understand that loan repayment does not begin until 1 year from loan closing, but wondering what I should expect from SBA in the meantime, if anything. Will there be a payment coupon book (real or virtual)? Any documents to be received by mail? Thanks!

5150d
5150d

Received the GRANT but declined for loan due to low (0) CGS. Fine with me.
Wife received loan approval but no GRANT yet……

Ashok
Ashok

Got an email with a small loan offer and to verify identity in portal. Verified identity but there is no sign of grant in the portal or my bank account . How does the grant work , do we have to accept the full loan amount to get the grant in the bank account ?

Avi
Avi

Ashok Same here, never received the grant even though I have a loan offer. Theoretically you don’t need to accept the loan (of any amount) in order to receive the grant, but I’m considering it just to keep the account active and to give them more time to give me the grant.

Ashok
Ashok

I heard that the loan application expires in 30 – 60 days. Are you sure nothing needs to be done to only get the grant if you dont need to get the loan amount that they have provided ?

Avi
Avi

Ashok I believe you have 30 days from the portal invitation date to select a loan amount, and then another 60 days to sign the documents once the loan amount has been approved. According to them, the loan and grant are completely separate, so you can ignore the loan offer and still get the grant. However, the overwhelming majority of applicants seem to get the grant automatically before they even receive a loan portal invite, so that doesn’t come into play for them. In my case, I don’t know how to get the grant pushed through, but figure at least starting the loan process couldn’t hurt.

Anonymous
Anonymous

If you accept the EIDL loan, does it get reported on your personal credit report. I have other things on there like my mortgage.

tuphat
tuphat

Re: SBA DRS’ point #3: “Check the Advance box.” Is that on the application, or the promissory note that you eventually sign?

Avi
Avi

tuphat It’s on the application.

tuphat
tuphat

Thanks. And … slow child here … does the promissory note reflect the advance amount (assume $1k) and that the fact that it will be forgiven? Just looking for some assurance that is the case. Thanks.

Avi
Avi

tuphat The SBA chose the wording carelessly, leading to needless confusion. The “advance” isn’t an advance on the loan (as one would expect), it’s a grant that’s completely separate from the loan. None of the advance/grant needs to be repaid provided it’s used properly, but the entire loan needs to be repaid.

tuphat
tuphat

Confirming: The amount listed in my promissory note and disbursed after signing were the same. That amount was in addition to the $1k “advance” that I received, which — like Avi said — is not really an advance loan disbursement but really a grant.

Rain
Rain

Question: I just got a loan approval from SBA ranges from $1000 – $15,000 but I only want the $1000 advance. What is the next step for this? Do I just accept the loan with $1000? Is that $1000 loan considered an advance? Appreciate any input as this is a bit confusing.

Kyle
Kyle

There seems to be some confusion as many (including myself) initially thought you had to accept the loan in order to get the grant (advance). That doesn’t seem to be the case. You don’t have to accept the loan in order to get the advance. Not sure how long it takes as my spouse received her advance a couple days after applying and I am still waiting having applied a couple months ago.

Rain
Rain

Thanks for answering. So even though SBA gave me a loan amount, I don’t need to do anything? Just need to wait patiently for them to send the advance to my checking account? Am I understanding it correctly?

Kyle
Kyle

Pretty much

Brian C 🐕

Very surprised and delighted to see $1,000 show up in my checking account this morning with the description “SBAD TREAS 310 MISC PAY 061920”.

I filled out the app on the 15th for my legit 1099 biz that i have been filing for years. Last few years has made next to no money but still file for it like a good little boy and glad i did. This will be very useful as I literally have no revenue now as my business involves face to face interaction which I can’t do and I still have to pay my overhead. Will keep my business alive for one more year, will see if I keep going in 2021, will have to see how things with covid go.

Had put down around $2,100 for revenue and $1750 for cost of goods. Was worried I would get rejected for such small amounts and thin margins but did not.

No emails from them or communications that I can find.
As far as I can tell no hard pulls on my credit either, and all are unlocked. Though in the past I have seen a hard pull from a bank show up on credit karma a few days after it was done. Usually though I think its almost immediate. Definitely nothing on my experian either which I have seen some post.

Good luck to all those applying.

TheNJDevil
TheNJDevil

I received an email after applying to choose a loan amount from 1K and larger. What do I need to do to get the 1K advance without any loan?

Robert G
Robert G

Serious question..

I only earned $400 in the last 12 months from my sole prop.. but I had mental plans to expand my sole prop business greatly in 2020 and then COVID hit. Would I be eligible in any way with this low income to get the 1k grant? I’m being honest here.. my income was very slow.. but I had big plans and 1k would go a long way. I’m just curious if I have a real shot to qualify for the 1k before spending a hard pull on it. thank you for any info

parkdanil

I made less than that in the last 2 years and I got just over 4k bucks from this.

Robert G
Robert G

that’s cool man. how much did you put down for income from last 12 months? sole prop?

David
David

Yea i got $27,800 3.75% from the SBA

Jeremy
Jeremy

I was told that you are not allowed to use EIDL funds for expansions or relocations. They have strict rules on what you are allowed to use the money for.