The Small Business Administration (SBA) has declared the COVID-19 situation an economic injury disaster for the state of Wisconsin allowing qualified small businesses to apply for an Economic Injury Disaster Loan (EIDL). Businesses may qualify for up to $2 million in loans to cover losses resulting from the pandemic. The interest rate on the loans is 3.75%. Payments on EIDL’s are deferred for four months and the payment terms are set on a case by case basis, but could extend up to 30 years.
Many factors go into qualifying for an EIDL, but a primary one is that a small business has to show a loss effective January 31, 2020 to now or in the future as compared to 2019 financial results. The definition of a small business varies by industry, but as an example most manufacturers with under 500 employees will qualify. The loan proceeds can be used for payroll, accounts payable, fixed debts and other bills that can’t be paid due to the COVID-19 disaster’s impact.
They currently estimate that it will take five days for loan applications to be reviewed and if approved, an additional approximately 3 weeks until the loan is disbursed. Collateral may be required.
Businesses will be asked to supply the following information as part of the loan application process:
- Tax information authorization (IRS form 4506T) for the applicant, principals and affiliates.
- Complete copies of the most recent federal income tax return.
- Schedule of Liabilities (SBA Form 2202).
- Personal financial statement (SBA Form 413).
- Profit and loss statements.
- Monthly sales figures (SBA Form 1368).
The best way to apply for a EIDL is via their disaster loan website:
https://disasterloan.sba.gov/ela/
Additional information is also available at the following websites.
https://www.sba.gov/disaster-assistance/coronavirus-covid-19
https://wedc.org/programs-and-resources/covid-19-response/
We will continue to provide more detailed information as it becomes available. If you would like assistance in applying for an EIDL please contact your Vrakas CPAs + Advisors team.