SCORE

100 Questions About EIDL and PPP Loan Programs
 

On August 10 the SBA will start accepting loan forgiveness applications from lenders.  Your lender can use the SBA loan forgiveness application forms or create their own online application form similar to the PPP loan application process. If you have used all of your PPP loan proceeds and you are ready to begin the forgiveness process, you should check with your lender for their specific instructions on how to file.

If your lender is using the SBA loan forgiveness application forms, you may use the one-page SBA Form 3508EZ if you can answer yes to one of three options (see Question 6 below.) If you can’t use the SBA Form 3508EZ, then you will need to use the SBA Form 3508 PPP Loan Forgiveness Application form.

Documentation requirements will vary depending on your specific circumstances. The basic documentation requirements include submitting receipts and reports to verify your payroll and non-payroll costs.  The list of required documents is found on page 6 of the SBA Form 3508 or on page 4 of the SBA Form 3508EZ.

If you have a PPP loan, an EIDL advance or an EIDL loan, then you may want to create a systems approach to tracking expenses for each of these programs. For example, if you are using QuickBooks, you can add a code (PPP Loan, PPP Forgiveness, EIDL Loan, EIDL Advance) to the memo field of each expense transaction. You can then customize a QuickBooks report to filter on each code. If QuickBooks isn’t an option, you could export your expense transactions from your accounting system into a spreadsheet program, add a column to classify the expense as noted in the QuickBooks example.

It is highly recommended that you maintain documentation to support every expense transaction within your accounting system.  This includes payroll reports, IRS payroll filings, tax returns, payment receipts, cancelled checks or statements, vendor invoices, etc. This will minimize your audit risks relating to the certifications you’ve made with each of these loan/grant programs.

Congress is currently working on a major new bill that will provide additional financial support to small businesses. This bill may change the forgiveness process for some borrowers, allow certain small businesses to apply for a second PPP loan, allow additional non-profits to apply for a PPP loan, impact the tax deductibility of certain expenses, etc. This bill may be signed into law before or around August 7th when Congress goes into recess for summer vacation and the national party conventions.  You may want to considering waiting several weeks before filing for forgiveness.

Disclaimer

The information provided in this blog does not constitute legal, tax or accounting advice, but is designed to provide a current understanding of the Paycheck Protection Plan loan and forgiveness program. You should rely on the guidance provided by the SBA and US Treasury Department, advice from your CPA or attorney, and instructions from your bank.  This blog has not been approved by SCORE or the SBA. We have indicated answers that have changed since our blog 60 Questions about the Paycheck Protection Program as “NEW.”

 

 

PPP Loan Forgiveness Application

Links:

Form 3508EZ PPP Loan Forgiveness Application

Form 3508EZ PPP Loan Forgiveness Instructions

Form 3508 PPP Loan Forgiveness Application

Form 3508 PPP Loan Forgiveness Instructions

Documentation requirements for the PPP loan forgiveness application is included in the PPP loan forgiveness instructions.

General:

  1. Where do I submit my PPP Loan Forgiveness Application? Your PPP lender.
  2. NEW When can lenders file my PPP Loan Forgiveness Application with the SBA? The new SBA PPP Loan Forgiveness Platform will be open for your lender to file your PPP Loan Forgiveness Application on August 10, 2020.
  3. NEW If I select 24-week period for my covered forgiveness period, can I submit a Loan Forgiveness Application when my funds run out?  Yes, provided that you have used all of the loan proceeds for which you are requesting forgiveness and your loan forgiveness application accounts for any salary reductions in excess of 25 percent for the full covered period.
  4. NEW If I’m submitting the SBA Form 3508 PPP Loan Forgiveness Application, what does the lender have to do before submitting my application to the SBA? The lender must confirm receipt of your certifications, confirm receipt of documentation to verify payroll and nonpayroll costs, and confirm the calculations on your PPP Schedule A and your PPP Loan Forgiveness Calculation Form.
  5. NEW If I’m submitting the SBA Form 3508EZ PPP Loan Forgiveness Application, what does the lender have to do before submitting my application to the SBA? The lender must confirm receipt of your certifications, confirm receipt of documentation to verify payroll and nonpayroll costs, and confirm the calculations on the PPP Loan Forgiveness Calculation Form.
  6. NEW Who can use the simple PPP Loan Forgiveness Application (SBA Form 3508EZ)? If you can answer yes to any one of the following statements, you can use Form 3508EZ:
  • You are a self-employed individual or an independent contractor or sole proprietor who has no employees at the time of the PPP loan application and have not included any employee salaries in the calculation of your average monthly payroll amount in your PPP loan application.
  • You did not reduce any of your employee salaries or hourly rates by more than 25% during the covered period or reduce the number of employees or hours employees worked as compared with the first quarter of 2020, excluding employees, who rejected a rehire offer and who you were unsuccessful in hiring similarly qualified replacements.
  • You did not reduce any of your employee salaries or hourly rates by more than 25% during the covered period or reduce the number of employees or hours employees worked as compared with the first quarter of 2020, excluding laid off employees due to your inability to operate during the covered period at the same level of business activities as compared to the period prior to February 15th due to HHS, CDC or OSHA regulations related to Covid-19 health safety issues.
  1. NEW What happens if my lender finds errors in my calculations or lack of substantiation in my supporting documents? The lender must work with you to remedy any issues the bank finds.
  2. NEW How long does my bank have to review and approve my PPP Loan Forgiveness Application? Your bank has 60 days to review and approve or deny your forgiveness application.  If approved, the bank must submit your forgiveness application to the SBA for final review and approval.
  3. NEW How long does the SBA have to review and approve my PPP Loan Forgiveness Application?  The SBA has 90 days to review and approve or deny your PPP Loan Application.
  4. NEW Will the SBA notify me, as the borrower, when they have approved or denied my PPP Loan Forgiveness Application?  No.  Your lender will notify you.
  5. NEW If only a portion of my PPP loan was forgiven, do I have to immediately repay the loan?  No.  Any remaining balance due on the loan must be repaid by the borrower on or before the maturity of the loan.
  6. NEW If my lender has denied my PPP Loan Forgiveness application in full, can I appeal the lender’s decision?  Yes. Within 30 days of receiving your notice from the lender, you may notify your lender requesting an SBA review of the lender’s decision. Within 5 days of receipt of your request for review, the lender must notify SBA of the request. SBA will notify the lender if SBA declines a request for review. If SBA accepts your request for review, SBA will notify you and your lender of the results of the review.
  7. NEW If the SBA determines that I’m not eligible for the PPP Loan Forgiveness amount that I’ve submitted to my lender, can I appeal the SBA’s decision? Yes. The SBA will issue in the near future a rule that addresses how to appeal their decision.
  8. NEW Can the SBA review or audit my PPP Loan Forgiveness Application?  The SBA may review any PPP loan of any size at any time at its discretion.
  9. NEW What are the new forgiveness caps on payroll costs for self-employed or sole proprietorships, or single-member LLCs assuming I have no employees? Assuming you have no employees, your owner-employee forgiveness is limited to:
    • Election of 8 weeks: 8/52 times your 2019 net profits up to $15,385.
    • Election of 24 weeks: 2.5/12 times your 2019 net profits up to $20,833.
  10. NEW What are the new forgiveness caps on payroll costs for self-employed or sole proprietorships, or single-member LLCs when I have employees? Assuming you have employees, your owner-employee forgiveness is limited to:
    • Election of 8 weeks: 8/52 times your 2019 net profits up to $15,385 plus your employee payroll costs.
    • Election of 24 weeks: 2.5/12 times your 2019 net profits up to $20,833 plus your employee payroll costs.
  11. NEW Where should I record any owner-employee compensation costs on my PPP Loan Forgiveness Application? If you are using the Form 3508 PPP Loan Forgiveness Application, you should enter owner-employee compensation costs on Line 9 of PPP Schedule A.  If you are using the Form 3508EZ PPP Loan Forgiveness Application, you should enter owner-employee compensation costs on Line 1 of the application.
  12. Is there a deadline for me to submit my PPP Loan Forgiveness Application? While there doesn’t appear to be a published deadline on the submission of your PPP loan forgiveness applications, borrowers will be required to start making payments of principal, interest and fees on the unforgiven portion of their PPP loan beginning on the date not earlier than 10 months after the last day of the covered period. This would indicate that borrowers should file their forgiveness applications within 10 months after the last day of your covered period.
  13. If my bank and the SBA can take up to 5 months to review and approve my PPP Loan Forgiveness Application, will the interest accrued related to the forgiveness portion of my PPP Loan Forgiveness Application be forgiven?  Yes. Interest will begin accruing from the date you received the loan proceeds.  Accrued interest related to the approved forgiveness portion of your PPP loan will be forgiven. 
  14. If a portion of my PPP loan is not forgiven should I return the unforgiven amount immediately to my bank?  Whether you pay off the unforgiven loan balance before the maturity date is up to you. 
    • Loans issued before June 5th: The minimum maturity date is 2 years unless you and your bank both agree to extend the minimum maturity date to 5 years.
    • Loans issued after June 5th: The minimum maturity date is 5 years.  Whether or not you prepay the unforgiven loan balance before five years is up to you. 

Self-employed Individuals/Independent Contractors/Sole Proprietor:

  1. As a sole proprietor (independent contractor), how do I apply for loan forgiveness? You should complete the PPP Loan Forgiveness Application and the PPP Schedule A.  Add the amounts paid to the owner-employee or self-employed individuals or general partners to Line 9 of the PPP Schedule A. 
  2. How do I document payments to myself during the covered period?  We recommend that you document payments made through checks or electronic payments payable to the owner-employee(s).
  3. If I have an LLC that has elected to be taxed as an S-Corp, should I follow rules for an LLC or an S-Corp? You should follow the rules of an S-Corp and pay your owner-employees through your payroll system. 
    • Form 3508: Your owner-employee compensation should be recorded on Line 9 of the PPP Schedule A.
    • Form 3508EZ: Your owner-employee compensation should be recorded on Line 1 of the application.

Covered Payroll Expenses:

  1. Is there a cap on the annualized salary/cash compensation for employees? Yes.  The annualized cash compensation of each employee has a cap of $100,000.
    • 8-weeks option: Employee cap is $15,385.
    • 24-week option: Employee cap is $20,833.
  2. Is there a cap on owner-employee salary/cash compensation during the Covered Period?  Yes.
    • If you have selected an 8-week period, owner-employees are capped by the lesser of their 2019 employee cash compensation (2019 Compensation/52*8) or $15,385 ($100,000/52*8).
    • If you have selected a 24-week period, owner-employees are capped by the lesser of their 2019 employee cash compensation (2019 Compensation/12*2.5) or $20,833 ($100,000/12*2.5).
  3. NEW If my business was considered a startup when applying for a PPP loan and I used January 1 to February 29, 2020 to calculate my payroll costs, is my owner-employee cap based on 2019 compensation or January 1 to February 29, 2020? We don’t know.  We are still waiting for guidance from the SBA.
  4. What percentage of my total forgiveness has to be covered payroll costs? Payroll costs must be at least 60% of your total forgiveness amount.
  5. Can the forgiveness amount include 100% of covered payroll costs?  Yes.
  6. If my employee is collecting partial unemployment and works for me part-time, can I include their payroll costs in my calculation? We believe that if your employment arrangement with the employee has not changed during covered period as compared to their pre-February 15th salary or hourly wage rate, the number of hours worked during the covered period is consistent with their hours in first quarter 2020, and their unemployment compensation is unrelated to your business, you should be able to include their cash compensation when calculating your forgiveness amount; however, we recommend that you review this issue with your CPA and with your bank before submitting your forgiveness application.
  7. Can I include 401k employer-match payments in my calculation of covered payroll costs? Yes.
  8. NEW Can I include employer-paid healthcare premium benefits in calculating my owner-employee costs on Line 9 of the PPP Schedule A (Form 3508) or Line 1 of the Loan Forgiveness Application (Form 3508EZ)? No.
  9. NEW Can I include employer-paid retirement plan contributions in calculating my owner-employee costs on Line 9 of the PPP Schedule A (Form 3508) or Line 1 of the Loan Forgiveness Application (Form 3508EZ)? No.
  10. NEW Can employer-paid life insurance benefits be included in the payroll calculation? No.
  11. Can I include bonuses paid to my employees in my calculation of covered payroll costs? Yes. However, your PPP loan application amount was based on 2.5 times your monthly payroll amount or 8 weeks of payroll.  Now that the covered period has been extended to 24 months, you may want to revisit your compensation strategy (for the covered period) to do what’s best for both your business and employees.
  12. If I laid off an employee and they didn’t accept my rehire offer, can I hire a replacement employee and include them in my calculation of covered payroll costs? Yes.

Covered Non-Payroll Expenses:

  1. What percentage of my total forgiveness can be non-payroll costs? You can use 40% of your total forgiveness amount for non-payroll costs.  If your PPP loan was $100,000 and your covered payroll costs during the covered period was $60,000, then you can use $40,000 for non-payroll costs.  However, if your covered payroll costs during covered period were only $30,000, then you can only use $20,000 for non-payroll costs. The balance, which isn’t forgiven, will remain an outstanding loan to be repaid based on the terms of the loan.
  2. What is included in non-payroll costs? Payments of interest on any business mortgage obligation on real or personal property, rent obligations on real or personal property or utility costs incurred during your covered forgiveness period. The underlying obligation must be dated before February 15, 2020. 
  3. What is included in utility costs? Electricity, sewage, transportation, telephone or internet access for which the service started before February 15, 2020. We believe that trash pickup gas, water should be included.
  4. What is covered under transportation costs? The SBA has not released guidance on which costs are included under transportation.  While we believe gasoline costs used for business is definitely included, we believe that the definition used by the IRS may be applied, which would allow you to select the standard mileage rate ($0.575 per mile) times your business miles or actual expense method that includes your costs of operating (gas, oil, repairs) a vehicle for business for the covered forgiveness period.

Covered Period:

  1. What does covered period mean? The covered period is when borrowers are generally eligible for forgiveness for covered payroll and non-payroll costs.
  2. How long is the covered period? The covered period has been extended from 8 weeks to 24 weeks.
  3. When does the covered period start? The first day of the covered period is the date when the PPP loan proceeds are deposited into your bank account or the start of your next payroll period if you have a weekly or bi-weekly payroll.
  4. Can I still elect to use the old 8-week covered period? Yes. If you received your PPP loan proceeds before June 5th, you may elect to use the 8-week covered period.
  5. Is my PPP loan forgiveness non-taxable income? Yes.
  6. Are the covered expenses used to calculate my PPP loan forgiveness deductible expenses for tax purposes?  The IRS current position is that covered expenses used for forgiveness are not deductible expenses for tax purposes.
  7. What if my payroll period doesn’t start when I receive my PPP loan proceeds?  The SBA is allowing borrowers with a weekly or biweekly payroll schedule to elect the first day of their first pay period following the date they receive their PPP loan proceeds.

FTE Reduction Adjustment:

  1. NEW If an employee’s salary or hourly rate was reduced by more than 25% and their hours were also reduced during the covered forgiveness period, is you need to make both an FTE Reduction Adjustment and a Salary/Hourly Wage Reduction Adjustment?  No.  You would only make an FTE Reduction Adjustment.
  2. What is an FTE? An FTE is an average full-time equivalency based on 40 hours. Example: if you have three employees—Jane who works 40 hours per week, Jose who works 20 hours per week, and Preston who works 20 hours per week.  Total FTEs equals 2 (40 + 20 +20) / 40.
  3. If I work 60 hours per week, does that mean I’m a 1.5 FTE?  No.  Weekly hours are capped at 40 hours per employee.  
  4. Do I calculate an FTE based on 30 hours or 40 hours? For purposes of calculating an FTE for the PPP loan forgiveness, you must use 40 hours.
  5. Is there an alternate way to calculate FTEs? Yes. The simplified method allows you to assign 1.0 FTE for employees who work 40 hours or more, and 0.5 FTE for employees who work fewer hours may be used at the election of the borrower.
  6. What if my FTE calculation differs from the number of employees that I listed on my PPP loan application?  That’s okay. The number of employees that was included on your PPP loan application was not an FTE calculation but a total of your fulltime and part-time employees.
  7. If the number of my employees fluctuates during the year, what base period should I use? Borrowers have three options in selecting the chosen reference period:
    • February 15, 2019 to June 30, 2019
    • January 1, 2020 to February 29, 2020
    • Seasonal businesses: either of the two preceding periods for a consecutive 12-week period between May 1, 2019 and September 15, 2019.
  8. What happens to my FTE calculation if I can’t rehire employees I laid off? If a business is able to document the inability to rehire individuals who were employees on February 15, 2020 AND the inability to hire similarly qualified replacement employees, then the related FTE will not impact the amount of loan forgiveness. This adjustment is recorded on the PPP Schedule A Worksheet under FTE Reduction Exceptions.
  9. What happens to my FTE calculation if I can’t find replacements employees? If a business is able to document the inability to rehire individuals who were employees on February 15, 2020 AND the inability to hire similarly qualified replacement employees, then the related FTE will not impact the amount of loan forgiveness. This adjustment is recorded on the PPP Schedule A Worksheet under FTE Reduction Exceptions.
  10. What happens if I can’t open my business due to government regulations? If a business is able to document the inability to return to the same level of business activity as before February 15, 2020 due to compliance requirements or guidance related to Covid-19 issued by HHS, CDC or OSHA, then the related FTE will not impact the amount of loan forgiveness. This adjustment is recorded on the PPP Schedule A Worksheet under FTE Reduction Exceptions.
  11. If my state government prohibits me from opening, does that impact my calculation of FTEs? We believe that unless state compliance requirements or guidance related to Covid-19 is based on HHS, CDC or OSHA compliance requirements or guidance, they should not be used to calculate your FTE exceptions.

Salary/Hourly Wage Reduction Adjustment:

  1. Can I give my employee a salary or hourly wage increase during the covered period?  Yes.
    • If you have selected an 8-week period, owner-employees are capped by the lesser of their 2019 employee cash compensation (2019 Compensation/52*8) or $15,385. Employees are capped at $15,385.
    • If you have selected a 24-week period, owner-employees are capped by the lesser of their 2019 employee cash compensation (2019 Compensation/12*2.5) or $20,833. Employees are capped at $20,833.
  2. Is the amount of forgiveness reduced if an employee’s salary or hourly wage rate is reduced by 25%?  No.
  3. Is the amount of forgiveness reduced if an employee’s salary or hourly wage rate is reduced by more than 25%?  Yes.
  4. If an employee’s salary or hourly wage rate is restored by December 31, 2020 to first quarter 2020 levels, will that eliminate the salary/hourly wage reduction adjustment? Generally, yes. There is a three-step calculation to determine the amount of the salary/hourly wage reduction adjustment that may impact your adjustment amount.

PPP Loan Application

  1. NEW If I turn down my PPP loan offer by my bank, can I reapply at a later date? Yes.
  2. NEW When is the last date that PPP loans will be accepted by the SBA? August 8, 2020.
  3. What is the maturity date of my PPP loan that isn’t forgiven? The minimum maturity date of the unforgiven amount of your PPP loan is 5 years for PPP loans issued after June 5th.  For PPP loans issued before June 5th, your PPP loan can be extended to five years if your bank agrees to the change in maturity date.
  4. When do monthly principal and interest payments begin on my PPP loan? Borrowers will be required to start making payments of principal, interest and fees on the unforgiven portion of their PPP loan beginning on the date not earlier than 10 months after the last day of the covered period.
  5. When do I need to pay my 2020 Federal payroll taxes? The employer’s share of Social Security 2020 tax payments can be deferred to two equal installments due in December 2021 and 2022.
  6. Can I apply for an additional PPP Loan? No.  At the current time, the Paycheck Protection Program allows only one loan per entity.
  7. As the owner of my business, am I considered an employee? Yes.
  8. Are there any fees or penalties associated with repaying my PPP loan early? No. 
  9. If the approved amount of my PPP loan application included only my monthly payroll amount, but excluded my partnership compensation, can I resubmit my PPP loan application? Yes. All PPP lenders are authorized to increase existing PPP loans to partnerships.
  10. NEW Are there still available PPP loan funds?  Yes. Contact a SCORE Mentor and we will work with the SBA to connect you with a lending bank. The deadline for filing for a PPP loan is August 8, 2020.
  11. NEW How are payroll costs calculated for self-employed individuals without employees? The PPP loan will be determined based on the lesser of 2019 Form1040 Schedule C line 31 net profit amount and $100,000. (If there is a net loss, then net profit is zero.)
  12. NEW How are payroll costs calculated for self-employed individuals with employees? The PPP loan will be determined based on the lesser of 2019 Form 1040 Schedule C line 31 net profit amount and $100,000. (If there is a net loss, then net profit is zero) plus payroll costs.
  13. NEW Are healthcare insurance premium payments and retirement contributions added to payroll costs for self-employed individuals? No.
  14. NEW If I have an unforgiveable portion of my PPP loan proceeds, how can I use those funds?  Funds from a PPP loan must be used on covered costs as defined by the program.  For example, you can use those funds after the covered period (the period in which you can receive forgiveness) for payroll, interest on mortgages, rents and utilities.

Employee Count

  1. NEW What time period should be used to determine the number of employees for the loan application? The total number of employees should be the average number of employees during the same period that you used to calculate the average monthly payroll amount.
  2. NEW Are part-time or seasonal employees included in the employee count? Yes.

EIDL Advance

  1. I received $5,000 in my bank account. Is that amount related to my EIDL advance or my EIDL loan? Generally, amounts between $1,000 and $10,000 deposited into your account by the SBA will be your EIDL advance.  You will only receive proceeds from an EIDL loan, if you have signed loan documents using the EIDL loan portal.
  2. Is the amount of my EIDL advance deducted from the PPP loan forgiveness amount? Yes. The EIDL advance will be deducted from the PPP forgiveness amount by the SBA.
  3. If my EIDL advance is greater than the total PPP loan forgiveness amount, do I have to repay the remaining portion of my EIDL advance? No.
  4. Is my EIDL advance non-taxable income? Yes.
  5. Do I have to repay my EIDL advance? No.
  6. NEW Can I still apply for an EIDL advance? No.

EIDL Loan

  1. What’s the difference between an EIDL advance and an EIDL loan? The EIDL advance is non-taxable income that is completely separate from an EIDL loan.  The EIDL advance will be deducted from the PPP loan forgiveness amount by the SBA, if applicable.  The EIDL loan is an SBA loan that must be repaid by the maturity period of up to 30 years.
  2. Can all or a portion of my EIDL Loan be forgiven? No.
  3. Can I have an EIDL Loan and a PPP Loan? Yes.
  4. Can my bank issue an EIDL loan?  No.  All EIDL loans are issued by the SBA.
  5. What are the basic terms for an EIDL Loan? The maturity period is 30 years. The interest rate is 3.75% for for-profit entities and 2.75% for not-for-profit entities.
  6. How do I check the status of my EIDL loan application? You can call the SBA Office of Disaster Assistance hotline 877-641-8202 and ask for a Tier 2 operator. 
  7. NEW What are approved uses for my EIDL loan proceeds?  They can be used for working capital to alleviate economic injury caused by the Covid-19 Pandemic.
  8. NEW What are the prohibited uses of my EIDL loan proceeds?
    • Pay dividends or bonuses.
    • Pay cash disbursements to owners, partners, officers, directors, or stockholders, except when directly related to performance of services for the benefit of your business, however; you must receive permission from the SBA. 
    • Repayment of stockholder or principal loans, except when funds were injected on an interim basis as a result of the disaster and non-repayment would cause undue hardship to the stockholder/principal.
    • Expand facilities or purchase fixed assets such as equipment, furniture, fixtures, computers, etc.
    • Repairs or replacement of physical damages.
    • Refinance long term debt.
    • Pay down or pay off loans provided or owned by another Federal agency (including SBA) or a Small Business Investment Company licensed under the Small Business Investment Act.
  9. NEW If I take a portion or all of my compensation for my services as cash distributions, can I request an exception to SBA requirement restricting cash distributions upon acceptance of an EIDL loan?  Yes. You can contact the Birmingham Loan Serving Center for authorization.
  10. NEW How long do I have to accept the SBA EIDL loan offer? Two months.
  11. NEW What is the maximum amount that I can receive from an EIDL Loan? The CARES Act limits EIDL loans to a maximum of $2 million. The SBA has not disclosed the algorithm they are using to determine the size of a loan.
  12. NEW Do I need to personally guarantee my EIDL loan? No, however, if your loan is more than $25,000, your business assets will be collateral for the loan.
  13. NEW Can I prepay my EIDL loan?  Yes. There are no prepayment penalties.
  14. NEW Are there insurance requirements associated with my EIDL loan?  Yes.  You must have a hazard insurance policy including fire, lighting, and extended coverage on all items used to secure this loan to at least 80% of the insurable value.
  15. NEW Do I need to send the SBA proof of insurance? Yes.  You should submit proof of insurance to:
    U.S. Small Business Administration
    Office of Disaster Assistance
    14925 Kingsport Road
    Fort Worth, TX 76155
  16. NEW What are the major terms or requirements of a standard EIDL loan agreement?
    • Loan application for additional loans requires SBA approval.
    • Purchase American-made equipment and products with the proceeds of EIDL loan to the extent feasible.
    • File annual financial statements with the SBA.  In certain situations, the SBA can require that your financials must be reviewed by a CPA.
    • Submit a copy Resolution of Board of Directors to the SBA.
  17. NEW How do I appeal a decision by the SBA not to approve my EIDL loan application?  Mail your request to U.S. Small Business Administration, Disaster Assistance, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, Texas 76155 OR fax your request to 202-481-5931 or email your request to pdcrecons@sba.gov.
  18. NEW What are the reasons that would cause the SBA to not approve my EIDL loan application?
    • Unsatisfactory credit (SBA does not disclose their credit score requirements.)
    • Economic injury not substantiated
    • Not eligible due to character reasons
    • Applicant requests a change or fails to proceed to sign the loan documents
    • Not eligible because the applicant is not a small business
    • Not eligible due to delinquent child support payments
    • Business activity is not eligible
    • Unverifiable information (generally wrong EIN number or bank account information.)
  19. NEW What does economic injury not substantiated mean? This reason is generally caused when the applicant inputs the wrong information in the application in the fields requiring gross revenues and cost of goods sold.  You can appeal the SBA decision by filing IRS Form 4506-T and filing your 2019 tax returns with a letter explaining the error.

As always, SCORE volunteers are available to assist you. Feel free to reach out to your local SCORE chapter at www.score.org or call 401-226-0077.

For more than 50 years, SCORE has helped more than 11 million aspiring entrepreneurs and small business owners through mentoring and business workshops. More than 11,000 volunteer business mentors in more than 300 chapters serve their communities.

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About the Author(s)

 Bill  Cunningham

Bill Cunningham is a SCORE Rhode Island mentor and workshop instructor, focusing on business models, business planning, and QuickBooks Online. He is a CPA with more than 30 years of working in the television industry.

100 Questions About EIDL and PPP Loan Programs