How can COVID EIDL Loan help for Survival of your Business?

How can COVID EIDL Loan help for Survival of your Business?

Deskera Content Team
Deskera Content Team
Table of Contents
Table of Contents

Small businesses have struggled to stay afloat in these pandemic times. As the world grapples back to normalcy, there are still lots of businessmen in the world affected by this unanticipated loss. The footfall of customers is low in restaurants, hotels and gyms as people are still thinking twice before going to crowded places. These small businesses have suffered largely and have resorted to creative ideas to attract their once loyal customers.

To assist the small business owners, U.S. Small Business Administration (SBA) stepped forward to lend a helping hand. It announced some major enhancements recently.

What is EIDL?

The federal government of America created several programs to help small businesses recover from the huge financial loss due to the Covid19 Pandemic. EIDL is a federal disaster relief loan provided by the US government. Since the start of this government funding, the number of applications from small businessmen has risen significantly. This EIDL loan increase is a direct indication of the pandemic impacts.

According to the latest reports, the SBA is still accepting new applications as many businessmen want to take advantage of the newly changed policy. The EIDL loan cap has been increased to 2 million dollars to provide sufficient funds to the applicants. As a result, there has been a significant rise from small business owners who want to take aid post the policy changes.

Covid19 EIDL

As per the US government policy, the Covid19 EIDL is a business loan program given by SBA. It provides support to small businesses by borrowing friendly capital. This Covid Injury Disaster Loan (EIDL) program has been designed by the federal government to serve/ support small businesses. The EIDL loan increase was done to assist the business get back on track.

What key changes were introduced?

In September 2021, the enhancements for EIDL has been introduced with the following key changes -

  1. EIDL loan increase - the increase in the fund from 500,000$ to 2 million$, It can be used for various purposes such as working capital, operating expenses, purchasing equipment, paying off debt and even payroll for the employees.
  2. . Deferred Payment Period implementation - The businessman will be ensured to repay the EIDL loan 2 years after its origination.
  3. 30-day Exclusivity Window Establishment - For ease of access of these funds to Main Street Businesses, there is a 30-day exclusivity window for approval and disbursement of loans that are $500,000 or even less than it. The procedure for the same begins in 30 days.
  4. Expansion of Eligible use of funds - These funds can be used to prepay a commercial debt or even make payments on federal business debts.
  5. Simplification of affiliation requirements - To make this application easier, SBA has established simplified affiliation requirements.

Loan Details

If you want to apply for this federal loan for a businessman, you should first understand its terms and conditions. The EIDL is a loan that ought to be repaid. Let us understand this loan in more detail -

  • Loan term - 30 years
  • Maximum EIDL loan amount - 2 million dollars
  • Interest Rate - The EIDL interest rate is 3.75% for businesses and 2.75% for private non-profit firms
  • Payment deferment - The EIDL has automatically deferred the borrower’s payment for 24 months
  • Prepayment penalty - None
  • Collateral - Must be submitted for loans which are greater than 25,000$
  • Personal Guaranty - is required for loans that are more than 200,000$

What is the application process?

If you are a first-time applicant of Covid EIDL applicant, you must know the steps. Follow these steps for the EIDL application -

  1. Confirm your eligibility for the loan by reviewing FAQs for the Covid EIDL loan
  2. Properly fill out the Intake Form.
  3. Sign up on the government website for SBA
  4. Create portal username via SBA email
  5. Complete the portal steps
  6. Submit relevant documents online
  7. Give appropriate response to SBA requests for signature, confirmation, and documentation procedures

The average time required for processing your EIDL loan could be several weeks if your amount is less than 500,000$. In case you have already received funding once for your business and want to apply for another EIDL loan increase, the preliminary condition for this is you should not have any remaining outstanding amount.

How to apply for an EIDL loan increase?

If a businessman wants to apply for a loan increase, he should follow these steps -

  1. Confirm your eligibility by reviewing the  Loan Eligibility section.
  2. Log into your existing account on SBA Portal and modify the loan requirements. Here, you need not apply for another loan.
  3. Complete the portal steps with relevant documents
  4. Give appropriate response for requests related to signature, confirmation and documents.

The time required for this whole procedure could be several weeks.

Who Should Apply for Loan or EIDL Loan Increase?

The US government has started this EIDL loan to help small business owners meet ends in these pandemic times. If you are a vendor who is struggling to cover even the ordinary expenses for living and fulfil all eligibility requirements, you should apply for a Covid EDIL loan. Under this borrower’s loan program, you will get huge financial assistance from the federal government as your business has suffered heavy losses due to the ongoing pandemic. The borrower’s loan is available at a low-interest rate and can be repaid in the long term.

The EIDL loan increase program is applicable only for business owners located in the United States of America. The condition small business is defined as a business or agricultural firm which has less than 500 employees along with the inclusion of affiliates. Furthermore, you should be able to provide valid proof of working capital losses due to Covid-19.

Additional Eligibility Requirements

Before you apply for an EIDL loan, here is some additional information that you must be aware of to pass the eligibility criteria -

  1. The business must be in operation since or before 31st January 2020.
  2. Your business should have a valid IRS-issued Taxpayer Identification Number (TIN)
  3. The owners, members, or partners who have a greater than 20% stake in the business should be US citizens, non-citizen nationals or a resident non-American with a social

How to Apply through Email?

The application for an EIDL loan increase can be done online, via email. For this, the business owner must send a formal email to

In addition, you must include “EIDL Loan Increase Request” along with (your 10-digit application number) in the subject line.

When you are drafting a formal application for help from the federal government for business funds, remember to include this in your application -

  1. Application number
  2. Loan number (if you have been already approved for a loan once and want an increase)
  3. Business name and address
  4. Business owner name
  5. Phone number

While sending the application via mail, do not attach any financial documents or other vital documents. You shall receive a call from SBA for follow up and get full information of the needed documents that should be submitted for further processing.

Documents for verification

The EIDL applicants are expected to submit the following documents which confirm their federal income taxes -

  1. Federal income tax
  2. IRS Form 4506-T (Request for Transcript of Tax Return)
  3. ODA Form P-022 Standard Resolution

IF you have already filed for IRS form 4506-T for a different loan program, you should file a new form for EIDL. Moreover, if your loan application is larger than 500,000$, you must also give additional documents like

  1. SBA Form 2202 – Schedule of Liabilities
  2. SBA Form 413 – Personal Financial Statement

The SBA can request additional documents during the EIDL loan increase process. Hence, the businessman should keep checking his SBA portal and email account to keep a track of the application status.

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The EIDL is a loan provided by the federal government of the USA to help business owners who have incurred heavy losses in the ongoing Covid-19 pandemic. By properly submitting required documents and IRS forms, an owner can get a borrower’s loan amount up to 500,000$.

Short Summary

  1. The US government has increased the financial limit of loans for small business owners who have incurred heavy losses due to the Covid-19 pandemic
  2. These small businesses include - hotels, restaurants, gyms etc. The condition is the business must have been started on or before 31st January 2020. Both business and business owners & partners must be in the USA
  3. The EIDL loan is available at a very low interest rate and is a long term loan for US businessmen who are finding it difficult to generate a living income and even pay their employees
  4. The expansion of the EIDL loan increase in September 2021 has been a big relief for most business owners in America. Application for it can be made if you satisfy the eligibility requirements
  5. You can apply for EIDL online through the SBA portal or even make an application via email. It is advised to not include any financial documents in the mail and respond only when you receive a request for verification for security purposes
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