The Economic Injury Disaster Loan (EIDL) program, administered by the Small Business Administration (SBA), has been a vital source of financial assistance for many businesses affected by the COVID-19 pandemic. However, navigating the application process can be daunting, especially when it comes to demonstrating economic hardship. In this article, we'll explore five ways to successfully complete the SBA EIDL hardship application.
Understanding the EIDL Program
Before we dive into the application process, it's essential to understand the basics of the EIDL program. The EIDL program provides low-interest loans to small businesses, agricultural businesses, and certain private non-profit organizations that have suffered economic injury due to a declared disaster. The loan proceeds can be used to pay fixed debts, payroll, accounts payable, and other expenses that could have been paid if the disaster hadn't occurred.
Demonstrating Economic Hardship
To qualify for an EIDL, businesses must demonstrate economic hardship. This means showing that the business has suffered a significant loss of revenue or income due to the declared disaster. The SBA uses a formula to calculate the economic injury, which takes into account the business's gross revenue, cost of goods sold, and operating expenses.
5 Ways to Successfully Complete the SBA EIDL Hardship Application
1. Gather Required Documents
To complete the EIDL hardship application successfully, you'll need to gather all required documents. These may include:
- Business tax returns (2018, 2019, and 2020)
- Financial statements (balance sheet, income statement, and cash flow statement)
- Payroll records
- Accounts payable and accounts receivable records
- A detailed description of the economic hardship suffered by the business
2. Calculate Economic Injury
To demonstrate economic hardship, you'll need to calculate the economic injury suffered by your business. This involves using the SBA's formula, which takes into account the business's gross revenue, cost of goods sold, and operating expenses.
- Gross revenue: Calculate the business's total revenue for the period before the disaster (e.g., 2019) and the period after the disaster (e.g., 2020).
- Cost of goods sold: Calculate the business's total cost of goods sold for the period before the disaster and the period after the disaster.
- Operating expenses: Calculate the business's total operating expenses for the period before the disaster and the period after the disaster.
3. Complete the Application Form
Once you've gathered all required documents and calculated the economic injury, it's time to complete the application form. The application form will ask for information about your business, including:
- Business name and address
- Business type (sole proprietorship, partnership, corporation, etc.)
- Number of employees
- Gross revenue and cost of goods sold
- Operating expenses
- Description of the economic hardship suffered by the business
4. Submit the Application
Once you've completed the application form, it's time to submit it to the SBA. You can submit the application online or by mail. Make sure to follow the SBA's instructions carefully and submit all required documents.
5. Follow Up with the SBA
After submitting the application, follow up with the SBA to ensure that your application is being processed. You can check the status of your application online or by contacting the SBA's customer service.
Gallery of EIDL Hardship Application
FAQs
What is the EIDL program?
+The EIDL program provides low-interest loans to small businesses, agricultural businesses, and certain private non-profit organizations that have suffered economic injury due to a declared disaster.
How do I demonstrate economic hardship?
+To demonstrate economic hardship, you'll need to calculate the economic injury suffered by your business using the SBA's formula, which takes into account the business's gross revenue, cost of goods sold, and operating expenses.
What documents do I need to submit with my application?
+You'll need to submit business tax returns, financial statements, payroll records, accounts payable and accounts receivable records, and a detailed description of the economic hardship suffered by the business.
By following these five ways to complete the SBA EIDL hardship application successfully, you can increase your chances of getting approved for a loan. Remember to gather all required documents, calculate economic injury, complete the application form, submit the application, and follow up with the SBA.