Where do I apply?
You can apply through the SBA website here.
At a high-level, what does the application process involve?
Complete the streamlined initial application online.
Gather all necessary documents listed in this guide to prepare for the loan application process.
The SBA reviews your credit and requests additional documentation. A loan officer may contact you via the online portal, phone, or email.
If approved, you accept or decline your loan. If you approve, you receive initial disbursement within five days of signing.
Repayments start 11 months later.
We recommend applying ASAP. You can apply online here.
What you’ll need to apply
As far as financial statements, all you’ll need to apply is an income statement spanning February 2019 to January 2020. (Check out our CPA-reviewed guide on income statements here) If you don’t have one, Bench can do your 2019 bookkeeping and get you a completed income statement, fast. Learn more.
The application form (step by step)
Section 1: Disclosures
This section asks you to verify your eligibility in two ways: first, select the type of business you are applying on behalf of. Secondly, you will be asked to check off each box listing the SBA’s eligibility requirements. If you are unable to check each box, you may not apply.
Section 2: Business information
This section makes up the bulk of your application. You will need your income statement as of January 31, 2020 on hand. It is important to note that not all answers are required.
Questions to watch out for:
Applicant’s Legal Name: Use your business name, shown exactly as it appears on your tax return.
Business Phone Number: Use a personal phone number so it’s easy to get a hold of you.
Gross Revenues for the Twelve(12) Month Prior to the Date of the Disaster (January 31, 2020): This number will be on your annual income statement
Cost of Goods Sold for the Twelve(12) Month Prior to the Date of the Disaster (January 31, 2020): This number will be on your annual income statement
Compensation From Other Sources Received as a Result of the Disaster: List any grants received
Only fill out the sections not marked by a red star if they apply to your business. For example, you should not fill out “Non-Profit Cost of Operation for the Twelve(12) Month Prior to the Date of the Disaster (January 31, 2020)” unless your business is a Not-for-Profit.
How to calculate your gross revenue
On the application, you’ll be asked to state your business’ gross revenue. If you don’t have an income statement prepared already, here’s how to calculate it yourself.
Gross revenue is the total amount of money your business received from your products and services over the last year, without taking costs into account.
How do you find your gross revenue? Add up every sale your business made over the last year (before taking into account payment processor fees). That final number is your gross revenue.
Bench can help you get you caught up on your books for your application and provide you with an income statement and more month to month. Learn more about who we are.
How to calculate your Cost of Goods Sold (COGS)
The application will also ask for your Cost of Goods Sold (or “Cost of Service” if your business sells services). Your income statement will have this information. But again, if you don’t have an income statement, here’s how to calculate your COGS. (You can also review a more in depth article on Cost of Goods Sold in just 7 minutes)
COGS is the total cost associated with making or acquiring any goods sold during the reporting period.
That includes raw materials and the cost of direct labor. It can also include overhead costs directly connected to your profit-making activities—like utilities for a manufacturing facility, for instance.
There are two important things to note about calculating Cost of Goods Sold:
COGS is calculated based only on products you actually sold to customers and doesn’t include inventory you still have on hand.
It’s all about the production costs you incurred, and doesn’t include broader overhead expenses for the general operation of your business. (Check out our explanation and overview of overhead expenses)
COGS = Beginning Inventory + Inventory Purchases Made During the Reporting Period - Ending Inventory
The three numbers involved in your COGS calculation are:
Beginning inventory: The value of the product you started with. This should be the exact same number as your ending inventory from the previous reporting period.
Inventory purchases made (during the reporting period): The value of what you added throughout the year.
Ending inventory: The value of what’s left over at the end. If you have a smaller business, you will physically count everything that’s leftover. If you have a bigger operation, you’ll perform spot checks on your stock.
Need a refresher on inventory management? Try our guide on everything you need to know.
How to calculate Cost of Service (COS)
If you’re a services provider, you instead need to calculate your Cost of Service, which is simpler than COGS.
Cost of Service is just all the costs you incur during the process of providing your service. So if you’re a lawyer and you need to pay $8 to print a few hundred pages of a contract on behalf of a client, that $8 is part of your COS.
If you’ve been keeping up with bookkeeping, this shouldn’t be too difficult. If you haven’t been categorizing your transactions as you go, this will be trickier. If you need help with your retroactive bookkeeping and financial statements, learn how Bench can help.
Section 3: Business owners information
First, indicate whether your business is fully owned by another business. You would only select this if your business was a subsidiary of another company.
If your business is owned by individuals, you will need to fill out an Individual Owner section for each member of your business that owns 20% or more. Click the “add additional owner” box as many times as required. These individuals should be aware that the SBA will likely run a credit check on them as well.
You will need to include personal information here, such as:
- Date of birth
- Place of birth
- Whether you’re a US Citizen
- Residential street address
Section 4: Additional information
The first three questions ask you to specify whether any applicants - including any additional owners - have been involved in criminal charges. This is not always a hard disqualifier for the SBA, which is why it was not included in the Disclosures section, but may dramatically affect your chances of acceptance.
Fill out the section in blue only if you have hired a service to complete your application for you, or asked someone else to fill it out on your behalf. This would include asking an employee to fill out your application.
You’ll want to double-check your banking information. You can find your nine-digit bank routing number on a check, usually on the bottom right corner. Check with your bank if you’re unsure—it’s not always listed online, but sometimes it’ll be listed in your banking portal or through a digital void check.
Frequently asked questions
What is the $10,000 grant about?
The CARES stimulus package introduced a new measure to allow businesses in operation on January 31, 2020 to receive essential funding as quickly as possible. The grant program was closed on July 13th when the $20 billion allocated to it had been expended. Here’s our analysis on the change.
How large can the loan be?
Up to $2 million, but the SBA will determine the amount available to you based on your operating expenses. This will likely be an estimation of your operating expenses over a six-month period. If the approved amount is too little, you can work with your lending officer. If it’s too much, you’ll be able to select a smaller loan amount on your loan portal.
At this time, reports say that EIDL loans are being capped to $150,000 to ensure there are enough funds to address demand.
When do repayments start?
For loans received in 2020, payments are deferred for 24 months from when you received the funds. For loans received in 2021, payments are deferred for 18 months.
How long will the loan take to process?
Disaster loans are usually expedited. However, the SBA has never had all 50 states and territories eligible to apply at the same time before, so no official timeline exists. After applying, you will also be assigned a loan officer who will work with you through the duration of your loan. Being quick to respond to your loan officer will allow you to reach an agreement faster.
What if the application is declined?
You’ll receive a written notice explaining why you were denied. Your business has six months to provide new information, and to provide a written request for reconsideration.
Do I have to accept the loan?
No, you can choose to decline the loan. So it doesn’t hurt to apply, especially considering this same information will likely be required for any other loans you choose to pursue.
What is the filing deadline?
December 16, 2020 (this varies slightly by state—some state deadlines are up to December 21). However, there is a grace period: if you miss the deadline, you may still apply with a written explanation as to why the deadline was missed.
What are the recordkeeping requirements for the EIDL once I have the loan?
Part of the recordkeeping requirements for holding an EIDL loan includes maintaining “current and proper” records for the most recent five years until three years after your loan maturity or after the loan has been paid in full. This will entail an income statement, a balance sheet, insurance policies, tax returns and related filings, records of earnings or dividends distributed, and records of compensation to owners or shareholders. (Read more in our 2 minute walkthrough here)
If you’ve accepted an EIDL and want to remain compliant, Bench can help.
What if I already have an existing SBA loan?
The SBA is granting automatic deferments through December 31, 2020. You’re allowed to have more than one SBA loan. The SBA will make six months of payments on 7(a) and 504 loans for you (this does not include the EIDL).
You can read more in our 2 minute guide on how the SBA is covering loan payments on select SBA loans during COVID-19.