The SBA is expected to launch the platform to increase EIDL loans to $2M on Monday, August 16th. (note the new application on SBA.GOV was up briefly on Sunday and then returned to the current $500K._
The amount you are qualified for is based on your 2019 total revenue minus your Cost of Goods Sold x 2. You also have to subtract any existing EIDL loan. So as an example, if your 2019 revenue was $1M, and your 2019 Cost of Goods Sold are $300K, you are eligible for $700K x 2, or $1.4 M. In this case, if the borrower has an existing $500K EIDL, their additional extension money would be $900K.
The other fascinating development is that we expect it will be allowed to use the money to pay off any commercial debt, including credit cards and government-backed debt. The terms of the loan are 30 years at 3.75% with two years of deferred payments.
Perhaps the most surprising element of this new program is that, based on what we know today, there is no requirement for a borrower to prove economic injury. So to qualify, you do not have to show your 2020 numbers and demonstrate financial loss.
I expect these loans to be a mad dash: with hundreds of thousands of business owners trying to take advantage of them and money available for only a fraction of them. This will be a win for the lucky lottery winners, but unfortunate for those whose businesses were hit by Covid and desperately need the money.
It seems that the SBA wants to prove its speed and processing capabilities instead of using the program as it is intended and helping those in need. That being said, if you are interested in applying, please check the SBA.GOV site for updates.