Can I get Financing if I took an EIDL?

By Matthew Elling
Co-Founder and Consultant at Line of Credit Depot
August 26, 2022

So you took an EIDL and need more financing... Now what?

The question many small business owners across the country find themselves asking... How will the EIDL debt servicing reflect in underwriting decisions when these businesses are applying for other commercial debt?

Months to a year after the COVID-19 Government imposed lockdowns 4 million US small businesses received the EIDL. The vast majority of these EIDL recipients never before received any SBA money for their business. So how will these SBA loans affect these businesses going forward? "Does it matter if I received the EIDL?” This is the common question we are receiving from small business owners.

The short answer is YES, the EIDL repayment liability will affect the underwriting for additional business debt. The EIDL is a 30 year note, which needs to be paid back. When an underwriter is reviewing a small business’ ability to repay a note, current debt servicing is accounted for. SO, the debt servicing of the EIDL will be taken into account.

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Because the EIDL is technically at a low interest rate, over a long period of time, the monthly repayment should be nominal. So it may not adversely affect a potential approval. Our advice is to try and repay this note early, to save interest costs.

We have seen some issues when it comes to EIDLs, which should be noted:

-Selling your Business

If you are selling your business, the EIDL must be paid off in full.

-Change in Ownership

If you are adding or removing ownerships of the business, the SBA needs to be notified in writing.

-Other SBA Loans

When businesses are applying for other SBA products, the EIDL debt must be disclosed on a debt schedule.

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