The COVID-19 pandemic took a huge financial toll on small businesses across the United States. While government assistance programs provided some relief, many business owners are still struggling amid ongoing uncertainties. If your small business has experienced increased costs or reduced revenues since receiving your initial Economic Injury Disaster Loan (EIDL), you may be eligible to request a larger loan amount through the EIDL loan increase program.
What is an EIDL Loan Increase?
The EIDL program, administered by the U.S. Small Business Administration (SBA), provides disaster relief loans to help small businesses and nonprofits overcome financial losses due to declared disasters like COVID-19. Recipients of the initial EIDL can request an increase to their approved loan amount if their business has experienced ongoing economic injury since receiving the original loan.
An EIDL loan increase allows borrowers to access additional low-interest, long-term financing to cover ongoing operating expenses and help their business stabilize. The maximum loan amount has increased over time – as of this writing in mid-2023, the maximum is $2 million. Increases are subject to direct approval from the SBA based on documented economic need.
Am I Eligible to Request an EIDL Loan Increase?
To be eligible to apply for an EIDL loan increase, your small business or nonprofit must meet the following criteria:
- You received an initial EIDL loan related to COVID-19 economic injury.
- Your business is located in a declared COVID-19 disaster area.
- You have continuously experienced at least a 10% reduction in revenue since receiving the initial EIDL loan. Ongoing economic injury must be demonstrated through supporting documentation.
- You have not reached the current $2 million cap on total combined EIDL funding (initial loan plus any increases).
Business owners who have already received one or more increases may be eligible to request additional increases if your company is still experiencing revenue declines or increased costs due to COVID-19 hardships. The SBA considers each request on a case-by-case basis.
Reconsideration vs. Increase: What’s the Difference?
It’s important to understand the difference between an EIDL loan reconsideration and an increase request. Both allow you to potentially access more funding but follow distinct processes:
Reconsideration: If your initial EIDL loan application was declined or you disagree with the approved amount, you can ask the SBA to reconsider the decision. This involves re-evaluating the application and any new information provided.
Increase: If your application was approved initially but you later experienced sustained business impacts exceeding the original loan amount, you can request that your existing EIDL be increased. You don’t need to provide a reason for the initial decision.
When requesting additional EIDL assistance in 2024 or beyond, start by determining whether to seek an increase or reconsideration based on your unique circumstances. The remainder of this guide focuses on successfully navigating the increase process.
Preparing Your EIDL Loan Increase Request
To maximize your odds of loan increase approval, take time to thoroughly prepare a complete and compelling application package. Here are some key steps and tips:
Review Eligibility Requirements
Double-check that you meet all criteria before applying. Pay close attention to ongoing revenue decline requirements.
Gather Documentation
Assemble critical documents like tax returns, profit/loss statements, revenue records, and receipts showing COVID-19 economic injury impacts. Highlight relevant details.
Calculate Increased Need
Estimate current and projected revenue losses, increased costs, and capital needs thoroughly justify the larger loan amount requested.
Draft Compelling Narrative
Explain in detail how COVID-19 has specifically harmed your business over time. Describe steps taken to mitigate impacts and stabilization plans going forward.
Request Exact Amount Needed
Ask only for the funding necessary to keep your doors open. Underestimating limits potential support while overestimating risk denial.
Allow Adequate Processing Time
The reconsideration process typically takes 4-6 months. Submit well in advance of deadlines or projected need dates. Avoid rushing incomplete packages.
Taking time on the front end greatly increases your chances of a favorable SALA decision. Get help from advisors if needed to ensure a polished, impactful application.
The EIDL Increase Application Process
After gathering the required documents and determining your request amount, here are the key steps to formally requesting an EIDL loan increase:
Create SBA Customer ID
Visit sba.gov to set up an account and obtain a Customer ID if you don’t already have one from a previous application.
Complete Online Application
Log into your SBA account and choose “Request Increase” under the existing EIDL section. Provide all business and request details.
Upload Supporting Documents
Attach financial statements, tax returns, and any other evidence substantiating ongoing revenue losses and increased funding needs.
Submit Application for Processing
After filling out forms and uploading documentation, submit the complete package to the SBA for review.
Await Decision Notification
The SBA will evaluate your request and supporting evidence. Allow 4-6 months for a decision to be communicated via letter or portal update.
Accept or Decline Approved Increase
If approved, log in to electronically accept or decline the amount offered within 30 days. Declining will close the application.
Be sure to address all questions thoroughly and completely explain your funding needs. Incomplete applications may be denied or cause delays. Careful preparation is key to a timely, positive decision.
Common Rejection Reasons and How to Overcome Them
While the SBA aims to help struggling small businesses, not all EIDL increase requests will be approved. Here are some leading causes for denial and tips for strengthening resubmissions:
Insufficient Documentation of Ongoing Losses
The SBA requires clear financial evidence that impacts persisted or intensified after the initial loan. Ensure documents thoroughly show losses extending to the present day.
Unclear Funding Need Amount Justification
Be explicit about why the exact amount requested is necessary and how it will specifically support recovery. Vague answers risk less or no additional funding offers.
Failure to Address Prior Decline Reasons
For reconsideration requests, directly address any concerns cited in the original denial letter point-by-point. Omitting this risks repeat rejection.
Incomplete or Late Application Package
Follow submission instructions carefully and get help to avoid missing crucial steps or passing deadlines. Even minor errors can lead to automatic denials.
With persistence and by thoroughly addressing weaknesses cited, most EIDL increases denials can be overcome through resubmission or reconsideration requests. Don’t give up at the first “no” – keep refining your case for support.
Strengthening Your Odds of Success in 2024 and Beyond
Certain strategies can boost approval chances in the new year and upcoming months as economic conditions evolve:
Highlight Ongoing Hardships
As COVID continues to impact operations, emphasize any new or worsening complications straining your business since the prior application.
Show Improved Financial Projections
Submit updated forecasts demonstrating a clear path to stability and growth if granted a larger loan amount for specific stabilization initiatives.
Explain Mitigation Efforts to Date
The SBA responds well to applicants striving to self-recover. Show efforts like pivoting operations, reducing expenses, and seeking new opportunities.
Network for Recommendations
Your local SBA office or small business development centers may provide guidance or written support citing your value to the local economy.
Watch for Targeted Outreach Programs
The SBA periodically launches special assistance initiatives for industries disproportionately impacted that allow streamlined loan increases by invitation only.
Following these best practices maximizes your application’s competitive edge throughout ongoing uncertainty. With diligence and perseverance, additional support remains within reach.
