At the start of the pandemic, nearly 3.8 million small businesses took out Economic Injury Disaster Loans (EIDL Loans) from the SBA. The average loan amount was $100,000 per loan according to the Small Business Administration. These loans are on terms of 30-years at an interest rate of 3.75%, and are intended to be paid back, unlike other ‘loans’ like the PPP (Payroll Protection Program).
Line of Credit Depot assisted our clients in obtaining over $10 million in EIDL products. Although needed at the time, these loans are presenting challenges to small businesses right now, over 3 years after the onset of the pandemic. The good news is that these challenges, often relating to affordability, aren't necessarily a non-starter when it comes to shopping for business credit.
Obtaining Bank Financing with an EIDL obligation
The first thing to consider is what type of program you are applying for from the bank. Most bank programs are underwritten by analyzing the business’s cash requirements for repayment of credit. This means that the monthly payment for the EIDL obligation will be taken into consideration during the underwriting process.
Other bank programs that don’t require this ‘debt servicing’ underwriting tactic are usually structured as an unsecured line of credit program. When applying with, Line of Credit Depot we take into consideration your EIDL loan obligation and work with our banking partners to issue the most favorable credit line.