Economic Injury Disaster Loan (EIDL) Update
SBA DISASTER LOAN (EIDL)APPLICATION HAS CHANGED
AS OF 3/26/2020 THE SBA ONLINE DISASTER LOAN APPLICATION PORTAL WAS DRASTICALLY CHANGED. CLICK HERE FOR THE NEW APPLICATION SITE. https://www.sba.gov/disaster/apply-for-disaster-loan/index.html
Right now you cannot apply online. The people working on the system are not able to restore that function so this limited temporary fix is offered. SBA will see another upgrade to the system in the near future that will be quicker and have more bandwidth to handle all those seeking assistance online.
You can either upload the data on the website or you can mail in physical copies of all the forms for your application. We advise you to fill out all the forms and submit them electronically (if you can) or by mail making sure somewhere in the forms to clearly designate all your monthly fixed debts you need to cover to operate each month at full capacity (payroll, owner/officer salary or distributions are taken each month normally, utilities, rent or mortgage payment, all business debts owed monthly like loan payments or credit card payments, vendor accounts owed as accounts payable, and insurance, etc.).
You do not have to send in business tax returns form 4506-T will take care of that line item. If you have the most recent tax return you can upload it or send in via mail with the forms as well as your Profit Loss Statements for Jan 1 to Dec 31 of 2019, and for Jan 1, 2020, To Date; Balance Sheets of the same time period is recommended. It is better to send extra information than not enough, but fill out ALL the forms possible that are listed on the new site.
The advice about the portal operations is no longer applicable as the portal has now changed. IF YOU HAD AN APPLICATION ALREADY IN PROCESS IN THE PREVIOUS PORTAL, INCLUDE THAT APPLICATION NUMBER SOMEWHERE IN THE DOCUMENTS YOU MAIL-IN OR UPLOAD ONLINE SO THEY KNOW IT IS THE SAME BUSINESS BUT YOU NEED TO DO THIS NOW AS THAT PORTAL IS CLOSED.
Questions can be sent to firstname.lastname@example.org and the Help Line number is still 1-800-659-2955.
CALL THE SBA DISASTER LOAN HELPLINE IF YOU HAVE QUESTIONS ABOUT THE APPLICATION WHILE YOU ARE FILLING IT OUT: 1-800-659-2955. The SBA staff answering is helpful and knowledgeable. Wait times vary, but they do answer and provide individual assistance.
GUIDANCE FOR BUSINESSES:
Please note this Guide is tailored for businesses. Private non-profit entities and agricultural cooperatives may need to seek guidance from other accounting and legal resources before completing the portal application.
First, if your business is suffering economically and has a current business loan with any lender, consider contacting your lender to request a loan modification (interest-only payments, partial or complete payment abatement, etc.) for the months in number it will allow; the bank’s ability to respond will be dependant on the type of loan product you have such as US Small Business Administration (SBA) guaranty program loan, in-house private bank loan, or online lender. Some local banks in NWA are already offering interest-free loan payment options to their customers for certain loan types at this time.
This SBA Economic Injury Disaster Loan Program (EIDL) is ONLY available for natural-born US Citizens or those with a valid Permanent Resident Card (green card). As we find out about other economic support programs for those business owners who do not possess these qualifications we will let the public know, we are ACTIVELY seeking to find these programs for these small business owners in our region.
These working capital loans of up to $2 million can be used to pay fixed debts, payroll, and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.
The SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
VISIT THIS LINK TO REVIEW THE SBA DISASTER LOAN APPLICATION FORMS AND THEIR INSTRUCTIONS THAT ARE LISTED AND NUMBERED IN THIS GUIDE BELOW.
It is VITAL that you read the INSTRUCTIONS associated with EACH form listed below to understand what the items mean, such as “Contingent Liabilities” for the Personal Financial Statement means loans or debts not in your personal name, but for which you are a co-signer or personal guarantor like business loans, business credit cards, children’s student loans or auto loans, etc.
The tax return “copies” referenced below are for you to gather, review, AND may need to UPLOAD as a PDF in the portal application. They MUST each include ALL schedules – thus comprising a complete tax return copy. The name of the business on the business tax return and the name of the business you use in the application need to match exactly.
Who can apply:
While paper applications are accepted, filing electronically is easier, faster and more accurate.
In order to be eligible, you must be a small business (500 employees or less).
- Small businesses affected by the disaster – common eligible businesses include retailers, restaurants, recreational facilities, tourism-based businesses, manufacturers, owners of rental property, hotels, wholesalers, and many more.
- Private nonprofits
- Small agriculture cooperatives are eligible, but agricultural enterprises are not
- Small aquaculture businesses
While paper applications are accepted, filing electronically is easier, faster and more accurate.
REVIEW these items below, have this information for your business and the owners personally gathered together in front of you to refer to when answering questions in the SBA application electronic portal as instructed in the portal:
- Review the Business Loan Application (SBA Form 5 for incorporated businesses and LLCs, SBA 5 C for sole proprietors), that information will be entered into the portal application.
- Review and prepare SBA Form 1368 to upload into the portal or enter electronically. This form is very important to determine a future working capital cash flow needs analysis for the SBA disaster loan. Have GATHERED together in front of your documents to list in the application and prove the losses your business has sustained due to the COVID-19 outbreak. The loans are for working capital which includes fixed debts, payroll, accounts payable, and other bills that can’t be paid due to the disaster’s impact. It does not cover lost sales, according to the SBA District Director. You will not be asked how much you would like to borrow. The SBA uses the information you provide to determine the loan amount. Small businesses can receive a secured loan up to $2 million, and an unsecured loan up to $25,000. GATHER financial information (e.g. income, account balances and monthly expenses) – Know the total amounts and payments due for debts that will be paid over the next 10 months or longer (i.e. mortgages, student loans, credit cards, etc.) Have your monthly expenses and financial projections ready.
- Review the IRS Form 4506-T, each principal owning 20% or more of the applicant business, each general partner or managing member and, for any owner who has more than a 50% ownership in an affiliate business will have to have this section entered into the portal. (“Affiliates” include the business parent company, subsidiaries, and/or businesses with common ownership or management to the business for which you are applying).
- The 4506 T form section in the portal is what allows the SBA to verify your business tax returns that were filed with the IRS and obtain a transcript of them. You will need to know what “title” was used on the business tax return line by the person who signed it.
- GATHER TOGETHER COMPLETE copies of the most recent Federal income tax business tax return filed for the applicant business, including all schedules. Be sure you have saved to your computer a PDF copy of it to upload if required. An explanation must be provided in the portal if not available for 2019 – if you have the documentation for your extension request for 2019 already completed and filed, that will be part of the explanation to enter into the portal. Regardless, you must provide the last business tax return filed AND gather together information for a detailed Profit Loss Statement and Balance Sheet for the entire year of 2019 for the applicant business if no filed business tax return for the business is available for 2019.
- GATHER together information for a current year-to-date 2020, detailed, Profit Loss Statement and a Balance Sheet statement for the applicant business to enter into the portal application as well.
- Review the Personal Financial Statement (SBA Form 413) for the sole proprietorship owner, or for each principal of the business entity owning 20% or more of the applicant business, each general partner or managing member, and have that information in front of you. This information will all be requested in the portal application.
- Review the Schedule of Liabilities form listing all fixed debts for the business (SBA Form 2202) and have that information in front of you to enter into the portal application.
- GATHER together complete copies to review, including all schedules, of the most recent personal Federal income tax returns for each principal owning 20% or more of the applicant business, each general partner or managing member, and each affiliate when any owner has more than a 50% ownership in the affiliate business. Affiliates include, but are not limited to, business parents, subsidiaries, and/or other businesses with common ownership or management. If you have the documentation for your extension request for 2019 already completed and filed, that will be part of the explanation to enter into the portal questions.
What’s next? What should you expect?
- You will receive an email confirmation that your application has been submitted.
- You will receive an email letting you know that your application is under review.
- BE PREPARED: You will be contacted by someone from the SBA.
- Have your monthly expenses and financial projections ready (The MillerMusmar CPAs team can assist you.)
Please be advised that, based on current IRS rules and standards, the advice contained herein is not intended or written by the practitioner to be used and cannot be used by the taxpayer for the purpose of avoiding penalties.
MillerMusmar CPAs is an established accounting firm with offices in Reston, Virginia and Manassas, Virginia. We have a twenty-five-year history of providing top quality auditing, tax and accounting services to clients throughout the Washington Metropolitan area and internationally. By combining the expertise of a mid-sized firm with the personal attention, we are both large and small enough to deliver a responsive service to our clients. For more information, please visit our website at www.MillerMusmar.com