FLOOD 2023 Disaster Lending: EIDL
November 15, 2023
With the Presidential Disaster Declaration in place (Vermont Declaration 18016 & 18017) business owners have some options for financial assistance available to apply for ECONOMIC INJURY through the EIDL (Economic Injury Disaster Loan) program.
- The deadlines for the program are:
- All counties except Addison: April 15, 2024
- Addison County: June 14, 2024
Please note that the application process for the loan Economic Injury for this disaster are more complex and detailed than what you experienced with the COVID EIDL. And we remind you that they are LOANS and will NOT be forgiven now or in the future (like the COVID EIDL). Do not apply and accept these loans unless you know that you can service the debt.
- We have created a Debt Calculator to assist you in figuring out if you can service the additional debt: Download Debt Calculator
Also note that the application process for Business PHYSICAL DAMAGE Disaster Loans related to the flooding is closed.
Here are the basic instructions and information for the Economic Injury Disaster Loans:
- Economic Injury Disaster Loans (EIDL) are working capital loans to help meet ordinary and necessary financial obligations that cannot be met as a direct result of the disaster. These loans are intended to assist through the disaster recovery period.
- These loans are determined in conjunction with the assigned loan officer by looking at the pre-determined period (encompass the flooding to the deadlines listed above) and comparing that to income/revenues from the previous years for the same period. If you do this application you will be directed by your loan officer on what material you need to provide.
- You did not have to have suffered any physical damage in the flooding. This loan looks at all businesses affected economically by the flooding.
- Loan Caps: $2,000,000 (the cap is $2,000,000 for either physical damage (if you have previously applied and have received a loan amount) or economic injury if you apply for just one and is $2,000,000 combined if you apply for both).
- Interest and terms will vary as indicated below and you will not know what rate the loan officer has assigned to your loan until the loan offer is made:
- For Businesses: 4% for 30 years.
- For those businesses who fall into the category of Credit Available Elsewhere (which is determined by the loan officer and based on your financials and the ability to borrow money from other sources) the rate is 8% and the term is 7 years.
- The Non-profit rate is:
- Economic Injury: 3.375%/30 years
- Credit requirements for the loans are:
- Your credit history – you must have a credit history acceptable to the SBA
- If you are denied a loan based on your credit rating you can ask for a reconsideration from your loan officer.
- Repayment – you must show with your business financials the ability to repay all loans.
- Collateral – Collateral is required for EIDL loans over $25,000. SBA takes real estate as collateral when it is available. SBA will not decline a loan for lack of collateral, but requires you to pledge what is available.
- Real estate is the preferred collateral. Loans of $200,000 or less will not require the owner of the business to use their primary residence as collateral if it is determined the owner has other assets of equal quality and a value equal to or greater than the amount of the loan.
- You may use the proceeds of these loans for working capital and normal expenses such as the continuation of health care benefits, rent, utilities, and fixed debt payments.
- These loans are applied for without the applicant knowing what the amount of the loan will be. The loan officer will review the details of your application and determine the amount of economic injury and combine that with your financials (including your credit rating, cash flow and current financial health of your company) and then make an offer.
- You have 60 days to review and decide whether to accept the offer.
- The offer will be reduced by the total amount of monies you have received from grants/other loans and insurance settlements after you submitted the application.
- You will be required to use your insurance settlement once it comes to pay back all or whatever portion the insurance covers of the loan.
- At this point you will also know the interest rate and term (number of years for repayment) that is being offered.
- Hint: do NOT inflate the value of your assets. Inflated value can lead to higher interest rates and less years to pay it back.
- If you have other federal loans (including the loans from Irene or COVID) the SBA will release your collateral as the loans are paid off.
- Note that the SBA will NOT COMBINE your current federal debt into one loan.
- There is no pre-payment penalty for these loans.
- If you would like to read the fact sheet from the SBA on these loans it is here:
Please note: If you did apply for Business Physical Damage and checked the box for both Physical Damage and Economic Injury you will be using the original application and all the details you have already provided. At the point you activate the Economic Injury portion an SBA loan officer will requested the required information.
If you DID NOT do a Business Physical Damage Loan Application or you did the application BUT DID NOT CHECK the Economic Injury box please see the instruction for the process below:
- To begin loan process log in here:
- The SBA strongly suggests that an on-line application is the best practice.
- The easiest way to set up your account and begin the application process is to go to one of the BRC’s noted above and work with a trained SBA Customer Relations person.
- If you must submit it by mail then they note that the process will take much longer.
- Note: if you already have an EIDL from IRENE or COVID use your existing username and password.
- To begin creating your account with the SBA you must have:
- Active Email
- Smart Device & Camera
- Driver’s License – which you will be required to upload a photo of the front and back. Clear instructions will be provided.
- Creating an account will involve several steps that are clearly laid out and will require verification (this is for your protection). Have ready:
- A pen and paper
- Your phone to take screen shots.
- The SBA recommends adding the second layer of security using the phone option.
- You will be required to enter your Social Security number. Make sure you are on the SBA.gov website listed above.
- You must also enter the name of “owner” of your cell phone plan. If you are on a family plan you should have the name of who that person in your family is.
- If you do not have this use your name and phone number again.
- This is another reason to go to a BRC as they can assist with these kinds of issues if they arise.
- You will be provided with a Personal Key that you will use to continue. Do not lose this. Take both a photo with your phone and write it down and keep it in your Loan Application File (see below for our suggestions on keeping a complete copy of the application).
- You will be asked to verify your identity and log in again using your user name, password and Personal Key and then you will be ready to begin the application process.
- Application Process:
- You will choose which kind of loan you are applying for – Business Physical Damage or Economic Injury (SBA Form 5).
- Check only Economic Injury.
- If you did apply for the Business Physical Damage and checked both boxes and you get contacted by the SBA and you have now decided you do not want to apply for Economic Injury simply inform your loan officer that you are not going to go forward with it.
- Note that if you are a Sole Proprietor you will be asked to do a slightly different application (SBA Form 5C) but your cap amount of $2,000,000 will be the same
- You will be asked to select the Disaster Declaration, State, County from a Pop-up.
- You will be asked for a Certification as to truthfulness of the information you will be providing in the application.
- Your application number will be automatically generated and will start appearing on every page.
- We suggest having both a paper file and a digital file of your SBA application and all of the supporting documents that will be required to complete the process.
- Put your loan application number on the inside of the paper folder. And take a picture on your phone of the number as this will be your main way of keeping tabs on the process in the future.
- You will be required to provide the following information. IMPORTANT NOTE: the business is the APPLICANT not the individual. When information is requested about the applicant provide business information. You, as an individual, are considered the owner (or one of the owners) and your personal information will be provided then.
- All of your contact information.
- This includes a verified address so pay close attention here to the address the program shows.
- All of your insurance information.
- Who will be the lead contact for the application process.
- Number of employees
- This includes FT and PT employees.
- When business was established
- List of current management
- Estimation of loss – injury
- Who owns the business?
- All ownership above 20% must be accounted for whether it is an individual or another company.
- Demographic information on each owner is requested but is not required.
- The following disclosures must be made:
- Are other gov loans being paid or delinquent?
- Are individual owners paying childcare and are current?
- Are any owners (or the business itself) paying back taxes with an installment agreement?
- Did the applicant pay to get their application completed?
- You will be asked to sign certain consents:
- To authorize SBA to contact insurance company, contractor and bank. Or to access information from FEMA.
- To non-discrimination in use of loan proceeds.
- Personal Financial Statements for Each owner over 20% will be required (SBA Form 413 can be used if you do not have a CPA/Accountant to do this for you).
- Schedule of liabilities for each disaster damaged business and the Entity owner
- A completed and signed IRS form 4506-C which releases the IRS to provide the SBA with requested information.
- For the Business Entity
- For each individual owner over 20%.
- The website will generate the form.
- Download it
- Open and check that information on the form is correct -SSN, Address
- Sign it and re-upload
- “Next” will let you know that it has been uploaded
- Income Tax returns for the business.
- Schedule of Liabilities for the business (SBA Form 2202)
- There will be an application Submission Confirmation
- Print it and file it.
- The loan officer may want additional information (and this is HIGHLY LIKELY). You will get a message and you should go to your portal and see what the request is.
- You will have 7 DAYS to comply with the information request.
- If you do not comply then your application will be withdrawn application from active consideration and you will have to request once you do provide the information that it be re-activated.
- Types of things that can be requested:
- Further financial information including Profit and Loss Statements, Accounts Receivable.
- Any business interruption insurance assessments or other types of insurance you may have received.
- Any other loans or grants that you have received in relationship to the flooding.
- We highly suggest you check your loan portal frequently for messages and updates.
- The Loan portal will also keep you apprised of the status of your application.
- Application hints:
- Have all material prepared and ready to upload before you begin.
- You should have your phone to take pictures of parts of the application but do note that the SBA does not suggest attempting to do the application process via your phone. A laptop is best.
- Do not use the back arrows to go back and forth (they will bring you to the beginning of the process). Instead use “Back to my Application”
- Print a hard copy of everything out
- Save frequently (at each page is best).
- If you are offered the loan and you accept it disbursement will be explained by your loan officer.
- There will be no payments due in the first 12 months and no interest will be accruing in that time period.
- You will be required to provide proof of required/requested collateral.
- You will sign very lengthy loan documents that you should print out and READ and REVIEW very carefully.
- You WILL BE REQUIRED to carry flood insurance on the full value of the property (not just the amount of the loan).
- We suggest strongly that you find out what your monthly cost of flood insurance will be if you do not carry it currently so you know the total cost of this loan.
If you have questions you may call the SBA at 800-659-2955 or email: email@example.com
The VtSBDC Disaster Recovery Guide (DRG)
We have included a very important resource that you may need now or in the future: the VtSBDC Disaster Recovery Guide for Business (DRG). Created by the VtSBDC team after Tropical Storm Irene, the Guide lays out a step-by-step process for you to use in deciding how you want to proceed when there is a disaster. You can use the DRG with a VtSBDC Business Advisor, another trusted advisor, or on your own. The DRG can be accessed online here or you can contact us for a hard copy: https://vtsbdc.org/wp-content/uploads/2017/08/VtSBDC-cover-and-pages-clientdisasterguide.pdf