Should You Request an EIDL Loan Increase?

The SBA announced late last month that the loan limit for Economic Injury Disaster Loans (EIDL) would be increased dramatically. Borrowers who have already received an EIDL loan can request an increase to their existing loan to bring their loan up to the full $500,0000.

If you’re considering an EIDL loan increase, there are a few factors to consider. Here are some pros and cons to getting an EIDL loan increase, and how to request one if you decide to.

EIDL Loan Increase Pros and Cons

Thinking about increasing your EIDL loan? There are drawbacks and benefits to a loan increase. Here are some pros and cons of both choices.

Pros of EIDL Loan Increases

Increasing your EIDL loan could be very helpful for your small business if you are still struggling with pandemic-related revenue drops or reopening restrictions. Here are some reasons why getting an EIDL loan increase might be a good funding option for you:

1) Low Interest Rates

EIDL loans have a low interest rate of 3.75% for businesses, and a 30-year maturity. Many commercial lenders have higher interest rates than the rates offered on EIDLs. If you know you will need more funding for your business increasing your EIDL loan is likely a better option than pursuing a private grant.

2) Large Funding Cap

EIDL loans can now be up to $500,000, a significant enough amount to help you meet ambitious goals for your business. It’s difficult to get approved for a loan of that size as a small business owner with private lenders unless you can prove very high revenue streams, so if you need a bigger loan it’s worth requesting the increase.

3) Trusted Lender

The SBA, which administers EIDL loans, is a government agency, so you can be assured that you won’t be dealing with scams or fraud. The SBA’s policies are clearly stated and public. You can learn more about the EIDL loan terms here.

Cons of EIDL Loan Increases

While EIDL loans are a helpful funding option for many small business owners, there are still drawbacks to EIDL loans. Here are some cons of increasing your EIDL loan:

1) Personal Guarantee Required for Loans Over $200,000

EIDL loans of $200,000 require a personal loan guarantee, meaning that if your company was unable to pay back the loan, you as the owner would be financially liable for it. We have a guide on personal loan guarantees, and when to use them, available for our grants premium users (you can sign up for a grants premium trial here).

2) Increased Debt for Your Business

Like any loan, EIDL loans have to be repaid. Unlike PPP funding, which operates as a grant, you will have to pay back your EIDL loan with interest. Loan payments have been deferred until 2022, but interest will still accrue in the meantime. If you’d like to apply for grants rather than loans, you can access our curated grant database with a grants premium subscription.

3) It May Take Weeks to Hear from the SBA

Some fintech companies can get back to you about funding in as little as a few days. The SBA, however, often takes several weeks to process applications; at minimum, applications take about 10 business days. If you need funding very quickly, an EIDL loan increase is probably not the best option for you.

Conclusion: EIDL Loan Increases Are a Good Funding Opportunity for a Low-Interest Loan

If you need more funding for your small business, EIDL loans are a great option for a low-interest loan with a trusted lender, even though it may take the SBA some time to get back to applicants and a personal guarantee might be required. Loans are now available up to $500,000.

If you want to request an increase to your EIDL loan, we have a pre-populated email you can use available here. We will also be posting more EIDL and stimulus info here on the Skip Blog.

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