What To Do If Your EIDL Loan Was Declined For CREDIT?

We’ve had many interactions and exchanges with the SBA about clients whose EIDL loan was declined due to a low credit score.

What can you do if that happens? Our EIDL Blueprint is a guide for you to work through this process.

1. Ask for a Reconsideration. Often EIDL loans are automatically rejected by the computerized underwriting system. What you want is a human being to review your loan request. You get to a human by requesting a Reconsideration.

2. Prepare a Reconsideration letter. At the top of the letter include your name, company name, address, EIN (or SSN if you’re Self-Employed), and EIDL Loan number. REMEMBER: all your information must exactly match the information you inputted on the SBA website when you applied for the EIDL loan. If your name was not included as an owner or Authorized Preparer, then you cannot write the letter; only names that were inputted on the original EIDL application.

3. In the body of the letter, keep it short and concise. Request a reconsideration due to your credit explanation. Write a brief credit explanation in the next paragraph. For example, something like this, “The late payments on my credit report and the resulting lower credit score were directly a result of the COVID-19 pandemic. My income/revenue dropped dramatically and I could not pay my bills on time.”

4. Keep your credit explanation short. If you have any documentation that supports the explanation, be sure to include PDFs of that documentation with your request.

5. Sign and date the letter.

6. Send your request to pdcrecons@sba.gov.

Our advice is this: no matter how bad you think your credit is, do not lose hope. Request a reconsideration no matter what!

Can I Apply For Another EIDL LOAN?

We received this question on Twitter:
I already received an EIDL loan. Am I eligible to apply for another?

The History of the Economic Injury Disaster Loan (EIDL) PROGRAM was that it was established back in 1953. It was created for individual disasters declared in any one of the United States causing homeowners and business owners an economic injury .

For example, this month it may be a tornado in Ohio county. Two weeks from now it could be a flood in the state of Mississippi.

COVID-19 created its own unique disaster. The Small Business Administration (SBA) responded by offering an EIDL loan for the pandemic. We make this distinction because we want to answer this question accurately.

The fact is, you can apply for  multiple EIDL loans, according to the SBA as long as they are for different disasters that have affected you.

In other words, if you received a COVID-19 EIDL loan in April, but your county was affected by a tornado in September (and it’s declared a disaster area), then you can apply for another EIDL for the tornado disaster. We confirmed this with the Small Business Administration (SBA).

You cannot apply for more than one EIDL LOAN for the same disaster. However, the SBA has a provision for up to 24 months (or two years after the disaster), for you to request additional funding above the amount of your original EIDL loan.

Let us know if this is helpful and what other disaster financing questions you may have.

How to Apply for an EIDL Loan

An updated sample of the EIDL application with Trevor’s commentary on what changes the SBA has implemented when underwriting your EIDL loan.

Summarize your Finance Package

Summarizing your finance package can help to prioritize how your banker reviews your financing request.

We recently submitted a client’s financing request to one of the Lenders on our lending matrix.  Our Lender Rep. said, “Holy cow, you guys are on top of it with your summary. Not many brokers make it this easy to review the package.”

We made it easy because the client provided us with their financials. The financials were comprehensive. It’s a multi-million dollar corporation and we’re at the early stage of presenting to the lender. We want to show something that’s easily digestible. We want to ease  the process for the lender to give us a prompt review and tell us their interest in offering the financing.

Summarizing your financials is easy to do.  When you have a lot of line items that lead up to one type of deduction or one type of income source, simply summarize it. Drop it down to as few lines as possible so the lender can do a quick review and say,  “Okay, I see the picture here.”

The Lender doesn’t need to know the granular line-by-line details at this early stage; you want the Lender to give a fast review to gauge their interest. If the Lender expresses interest and offers a Letter of Intent for the financing, you can present the more detailed financials with your full loan application package.

For each client financing request, we write a summary statement. We present a one or two page statement describing some background on the business, the reason for their financing request, and, in bold, large font, the amount of our financing request.

Our presentation package for the initial Lender review is compact, yet complete.  The “first glimpse” by a Lender is sufficient to tell us if that particular Lender is the right fit for our client’s request, or if we need to locate a different Lender.

Watch our Financing Fodder YouTube playlist to understand what you’re up against when applying for a business loan. 

Download your “Homework”. You’ll thank us later

Stop worrying about what's required when pursuing a business loan for your small business. This list will indicate what a lender, bank, SBA, etc. will want to know about you and your small business if you're looking for a business loan. These are prudent documents that help tell your small business story. Without them, it's difficult for lenders to assess you as a risk when it comes to lending your small business money. This is NOT SPECIFIC to the SBA EIDL loan.