Do you want to know how an Economic Injury Disaster Loan or EIDL can help you get back on your feet after a natural disaster puts your business in Fort Collins at risk for closure? You are not alone. Many entrepreneurs encounter the same setback when a natural disaster hurts their business and causes financial trouble. Currently, small businesses are suffering from the effects of the COVID-19 pandemic.
Financial issues can be hard to handle, so much that it may lead to years of struggle or closure. Imagine years of hard work building a company and losing your investment in such a short time. This is one thing you cannot afford, and the government understands these circumstances. To help disaster-stricken businesses recover, the US Small Business Administration (SBA) has the EIDL loan program.
What is An EIDL Loan?
Entrepreneurs sometimes get caught in serious financial trouble when natural disasters occur and affect their small businesses’ health. They either run out of funds to support their business’ normal expenses or fail to provide their employees’ salaries and benefits. With the EIDL, small business owners’ hope of rebounding from the loss is revived.
The EIDL, or Economic Injury Disaster Loan, is a low-interest loan available for small businesses and nonprofit organizations that have experienced a temporary loss of revenue due to natural disasters.
The money will serve as an aid to weather the recession caused by natural disasters – snowstorms, hurricanes, earthquakes, or the pandemic.
For the EIDL to become available, the area your business is in must be designated a ‘Federal Disaster Area.’ It is NOT a requirement for the government to open up these loans to an area, but it often happens as part of the government’s aims to assist an area in recovery after a natural disaster.
Small Business Owners Can Fight Back COVID-19 Pandemic with An EIDL Loan
The last quarter of 2019 saw the rise of a novel coronavirus. With the limited information available, the unsuspecting public moved on with their lives as usual. And before we know it, the virus already had an official name, COVID-19, claiming lives here and overseas as a pandemic.
The world suddenly took a pause. The pandemic made the entire country a Federal Disaster Area as lockdowns were imposed, which allowed practically any business in the country to be considered within a disaster zone and avail of the EIDL loan.
People were reluctant to leave their houses, afraid that they may catch the virus. Some borders shut down and travel was restricted even domestically. Businesses, small, medium, and large took a serious hit, leaving the economy vulnerable. Many also lost their jobs.
This major event made the entire country a disaster zone.
To help the economy and small businesses recover, the COVID-19 small business loan application under the EIDL program re-opened on December 27, 2020, with the second stimulus bill’s passing, for those who need financial relief.
EIDL Loan Eligibility
Due to the COVID-19 pandemic, SBA has opened the EIDL loan to all small businesses, sole proprietors, and independent contractors who are eligible to apply. The SBA is also accepting applications from private non-profit organizations and agricultural businesses.
Qualified Businesses for EIDL Loan in Fort Collins
The EIDL loan program covers a wide range of industries. The following are qualified types of businesses:
- Small businesses (companies with no more than 500 employees)
- Sole proprietors
- Aquaculture businesses and agricultural cooperatives
- Cooperatives
- Tribal businesses
- Faith-based organizations
- Some private non-profit organizations
- ESOPs (employee stock ownership plan) with less than 500 employees;
- Independent contractors from January 31, 2020, to December 31, 2020
Depending on the type of business, the SBA follows specific standards for employee size. You can use SBA’s size standards tool available on their website to determine if your business qualifies.
Agricultural Businesses
Agricultural businesses can now apply for a COVID-19 small business loan, thanks to Congress which granted a new authority in response to the pandemic. Specifically, qualified agricultural businesses are those with 500 employees or less and are engaged in livestock raising, ranching, farming, and food production, among others.
EIDL Loan Amounts and Adjustments for 2021
Applicants could enjoy a maximum loan amount of $500,000 if their loans were approved during the week of April 6th, 2021. This equals 24 months of economic injury.
The COVID-19 small business loans amounting to less than $500,000 that were approved before April 7th, 2021 can be re-applied for an increase.
The SBA also imposes a 3.75% interest for businesses and 2.75% for nonprofits. The loan has a 30-year payment term, and repayment starts after 11 months from the date of disbursement, but borrowers can pay prior through Pay.gov or mail.
Triple Your Loan Amount with the SBA EIDL Loan Limit Increase
For 2021, the SBA has increased the loan amount to $500,000, which is more than triple the previous loan limit of $150,000. This means that you can get additional funding if you have previously qualified for the EIDL loan if you submit your application.
Business owners don’t need to worry about starting from scratch as the SBA will reach out to you through the business email that you provided upon application. To be considered for the additional amount, you will have to email them your application number and SBA loan number.
To apply:
- Log in to your EIDL portal to retrieve your application and loan number.
- Email SBA at covideidlincreaseRequests@sba.gov for your loan increase request. You can BCC yourself to have a copy of the email.
- In your subject line, put “EIDL Increase Request for [insert your 10-digit application number] / SBA Loan# (Different from Application Number)” so that they can easily determine the purpose of your message.
Be concise with your message and write:
EIDL Increase Request and my current loan information is following:
Application number: [insert your 10-digit application number]
SBA Loan #(Different from Application Number)
Business Name:
Business address:
Business owner name:
Phone number:
You can include a screenshot of your loan document that shows the loan and application number. The processing time may take a few days to a few weeks due to the high volume of requests. It is not necessary to send multiple emails. Doing so may only slow down the turnaround time. Be patient. An agent will contact you once they are available to handle your request.
Considering the Pros and Cons: Should You Apply for the EIDL Loan for Your Fort Collins Business?
You don’t want to lose your business, but applying for a loan may also be scary for you because of the obligations that come with it. One of the things that you need to determine is the choice that is best for your business. Would an EIDL loan help your business recover? Weigh the advantages and disadvantages before you decide.
Pros
- The EIDL loan has lower interest rates compared to traditional loans.
- Entrepreneurs in Colorado and across the country can enjoy long repayment terms with the EIDL small business loans, which lessens the pressure on their financial capabilities.
- Independent contractors and self-employed individuals can also avail of the EIDL loan.
- Application is easy. It only takes a few minutes to apply for the EIDL loan in Fort Collins provide that all financial documentation is complete.
Cons
- While application time is shorter and easier, the approval process can be a drag in some cases.
- Applicants may be required to have a good credit standing to get approved.
- Aside from numerous agreements or covenants, the variety of programs can be confusing.
- Obtaining the SBA’s approval for distribution first is important.
SBA has also started requesting copies of your Corporate Minutes for approval of loans.
EIDL Loan Requirements and Application Process
It’s a good thing that the government made the application process for the EIDL loan straightforward. Business owners can also appreciate the minimal requirements for submission, which is done online.
Application Process
- After filling out the online application form and submitting all required documents, an SBA loan officer will review your credit.
- An SBA loan officer may contact you via phone, email, or online portal to ask for additional documentation if necessary.
- Once approved, you will receive a notification through which you can accept or decline the loan. If you decide to accept, the amount will be disbursed within five days of signing.
Requirements
First, you can submit the application through SBA’s Disaster Loan Assistance portal with the following requirements:
- Verification of EIDL eligibility
- Income statement showing gross revenues and cost of goods sold (from February 2019 to January 2020)
- Supplemental financial statements
The preparation of financial documents can become a daunting task for small businesses with serious financial issues and limited resources. During these times, a professional bookkeeper or CPA will not only speed up preparing and submitting the documents but also help you determine if you are eligible before wasting time on an application.
How You Can Use the EIDL Small Business Loans in Colorado
Because of the financial devastation caused by disasters, let alone the COVID-19 pandemic, many small business owners try hard to compensate for the losses. They do what they can to save what is left of their enterprise and avoid closure. Another reason they strive to keep their business open is so that their employees can also keep their jobs.
The EIDL loan available for small businesses in Fort Collins is a life-saving program that lets entrepreneurs continue their operations. They can use the loan’s proceeds for the following:
- Paying utilities and rent (fixed debts)
- Payroll
- Continuation of health care benefits
- Accounts payable
- Regular business expenses
One important thing to remember is that there is a limit on how businesses can spend the loan proceeds. For example, they are not allowed to use them for:
- Loan repayments and long-term loan refinancing
- Bonuses and dividends
- Disbursements to owners (draws and distributions), except when directly related to the performance of services
- Expansion
- Relocation
- Fixed asset acquisition (e.g., purchasing new equipment)
- Repair or replacement of physical damages, renovation of facilities
Take Advantage of the EIDL Loan and Save Your Small Business in Fort Collins
Many businesses not only in Fort Collins but across the country need temporary financial relief because of the pandemic. The SBA’s EIDL loan program is truly a big help in keeping the economy going. If you are among the many small business owners who want to keep your company afloat, you should take advantage of this opportunity.
Start with preparing your financial documents, which is a primary requirement for a successful application. A loan officer will review your financial statements carefully and decide whether you are qualified or not. For this reason, your financial documentation has to be precise, accurate, and comprehensive.
A Knowledgeable CPA About the EIDL and Other Small Business Loans Available to You in Fort Collins and Colorado
It is critical to present reliable data, which is why you need a professional CPA to prepare them for you. You need someone who will take the load off your shoulder and perform an excellent bookkeeping or accounting job to ensure that your submissions will be on point. In this area, our expert financial team at Steven J. Wick & Associates can help you.
We have a team of seasoned accountants who can help with your financial statement preparations. And if you need more than accounting services, we also offer business consulting services, which will be useful in getting your business back on track.
Steven J. Wick & Associates also offers tax, payroll, and CFO services. Call us today to know how we can help you!
