EIDL Reconsideration: How to Get a Second Chance

If your EIDL loan application was denied by the SBA, you still have an opportunity to request that they take another look. This reconsideration process has been a successful strategy for many applicants, but you’ll need to have a detailed reconsideration package.

Here are our tips on preparing a successful EIDL reconsideration proposal. This guide is written for business owners who were denied an EIDL, but you can request a reconsideration for other purposes too, such as if your approved loan amount was too low.

How does getting denied for an EIDL work?

If you were denied an EIDL loan by the SBA, you should receive a notice in writing with a reason for the denial. You have the right to present information to address the reason for the decline and request reconsideration.

When you submit a request for reconsideration, you need to provide all the new information that will overcome the SBA’s denial. According to the SBA’s regulations, you must also provide your current business financial statements. (Get an overview of what financial statements are here).

You have six months from the notice to request a reconsideration.

What are some reasons I may be denied for an EIDL?

1. Economic injury not sustained/Economic injury is not substantiated

You may be denied an EIDL if your reported Cost of Goods Sold was greater than your reported revenue, implying your business was operating at a loss. This is called your gross income and you can read more on the types of income here. The SBA can decline your application with the code “Economic injury not sustained”.

If there was an error with your reported figures, you can request a reconsideration. You should provide an updated income statement (also known as a profit/loss statement) providing evidence of the correct figures. Review everything you need to know about income statements in just 6 minutes.

You can also use financial statements such as a monthly income statement to substantiate your economic injury. The SBA’s Form 1368 (PDF) is a handy form where you can compare your current monthly sales figures to the previous three years.

If your calculated eligible loan amount is less than the amount you already received from an EIDL advance, you may be declined for the loan under this reason too.

How Bench can help

If you need help providing evidence of your economic injury, Bench can ensure your income statement and financial figures are accurate so you can submit a strong reconsideration application. How do we do that? Our historical bookkeeping team will complete your bookkeeping for the months you need to proove your economic injury. Then, we provide financial statements with accurate figures to submit in your reconsideration request. Get started with a free consultation to learn more.

2. Unsatisfactory credit history

The EIDL loan process includes a credit check. Your personal credit score will be pulled, and it will play a substantial role in determining your eligibility for an EIDL. If the score is too low, your application will be denied.

Anecdotal reports say the SBA uses the VantageScore credit score, not a FICO credit score. We’ve seen the minimum score reported to be 570. VantageScore has a list of providers that allow you to check your credit score for free.

To have a successful EIDL reconsideration, you will need to improve your credit score, or provide evidence that your score is currently not an accurate representation of your financial situation. There are many factors that affect a credit score, but an effective strategy is to pay down your credit card balances to reduce your credit utilization.

Your business credit score can also play a factor. Check out our guide on how to start building business credit today.

3. Business activity is not eligible

Some industries such as gambling and investing are not eligible for EIDL funding.

If those restrictions don’t apply to you and you believe you should be getting funding, it is likely that the SBA’s information on your business is inaccurate. We suggest pulling a copy of your business credit report and verifying the NAICS code or SIC code that indicates your business’s industry. If your business has moved, especially across states, you should also verify your business address.

If you notice any inaccuracies, update your business credit report (such as through Experian’s service) and provide supporting documentation such as a tax return with your correct industry code, or an IRS letter confirming your address change.

You may also want to verify the business information on file with your state and/or county. If any information is inaccurate, submit requests to make the changes. You can attach evidence of the request to your application.

How do I request a reconsideration?

Contact the SBA’s Disaster Assistance Processing and Disbursement Center through email at pdcreconds@sba.gov with your reconsideration request. A good reconsideration request will clearly summarize the SBA’s reason for rejection, explain your reasoning for the reevaluation, and provide supporting documents to strengthen your proposal.

Be sure to include your EIDL loan application number, the date you applied, your business name, and your contact information. Form 4506T may also be requested. The form gives permission to the SBA to access your tax records directly from the IRS.

What would be a good sample reconsideration letter?

Attention: EIDL Reconsideration Department

I am requesting a reconsideration of my SBA EIDL loan application No. [EIDL APPLICATION NUMBER] for my business, [BUSINESS LEGAL NAME]. The application was denied due to [DENIAL REASON].

I believe I should be eligible for the EIDL because [PROVIDE EXPLANATION]

Attached to this submission are my supporting documents:

[BRIEF DESCRIPTION OF FILES]

Thank you for your time in reconsidering my application. If you have any questions, I am available anytime by phone at [PHONE].

Sincerely,

[FULL NAME]

How long does it take to get reconsidered?

Timelines can greatly vary, depending on the complexity of your situation and how complete your application is. Anecdotal reports range from two weeks to several months.

Ensure the contact information you provide is accurate, because a SBA loan specialist may need to contact you for further documentation or verification.

Additional resources

Everything you need to know about the EIDL

Everything you need to know about other funding options

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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.

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