SBA EIDL FAQ

Borrowers may use COVID EIDL working capital loan proceeds to make regular payments for operating expenses and to: • Pay or pre-pay business non-federal debt incurred at any time (past or future), including monthly payments, payments of deferred interest; • Pay regularly scheduled payments on federal debt; • Payroll; • Rent/mortgage; • Utilities; and 3 • Other ordinary business expenses. Note: Borrowers with existing COVID EIDL loans are able to use any available loan proceeds on these authorized uses of proceeds You may not use the funds to: •Expand your business; •Make prepayments on debt that is owned by a federal agency (including SBA) or an SBIC. • Start a new business

Loan or Grant: A COVID EIDL loan is a loan that must be repaid. Unlike the Paycheck Protection Program, a COVID EIDL loan is not forgivable. Interest Rate and Term: Businesses: 3.75% fixed for 30 years Private nonprofit organizations: 2.75% fixed for 30 years Payment Deferral: The loan term is 30 years; payments are deferred for 24 months (during which interest will accrue) from the date of first disbursement of the Applicant’s original COVID EIDL loan. Monthly payments of principal and interest will begin at the end of the deferment period and will be paid over the remaining 28 years. You may make prepayments at any time without penalty.

$0 - $25,000: No collateral required $25,001 – $500,000: Security agreement (UCC-1) lien required on business assets - A UCC filing is a legal notice that SBA will file with the Secretary of State to record a security interest against your business assets. SBA will charge a one-time $100 fee for filing the UCC-1 lien. $500,001 - $2,000,000: Security agreement (UCC-1) lien required on business assets and a best available mortgage on real estate owned by the applicant business. SBA will charge a one-time $100 fee for filing the UCC-1 lien. Additionally, the borrower will be responsible for recording the real estate lien and paying the associated fees.

$0 - $200,000: No personal guarantee required $200,001 - $2,000,000: Except for nonprofit organizations and loans to ESOPs, all loans require a full personal guarantee from: • All individuals or entities owning 20% or more of the applicant business; • For sole proprietorships, the proprietor; • For independent contractors, the contractor; • For General Partnerships, all general partners; • For Limited Partnerships, all general partners and any limited partner who owns 20 percent or more of the partnership; • For Limited Liability Entities, the Managing Member and any member who owns 20 percent or more of the entity; • For Corporations, any individual or legal entity who owns 20 percent or more of the voting stock. If no single owner owns 20% or more, then at least one individual or entity must provide a full guaranty. A personal guarantee is an agreement that an individual makes to assume responsibility for payment of a loan in the event that the applicant business (“borrower”) fails to repay the loan in accordance with the loan agreement or note. The person who signs the guaranty is the guarantor. The personal guaranty remains in place until the loan is paid in full. (See SOP 50 52 for information on substitution of guarantor. Send substitution requests to PDC.AccountsCollateralReview@sba.gov.) Individuals required to sign personal guaranties must sign an Unconditional Personal Guarantee, which is provided as part of the loan closing documents through the application portal. Unconditional Personal Guaranties must be signed by all required parties and returned to the SBA before the COVID EIDL loan funds will be disbursed. Personal guaranties are not a substitute for any collateral required by SBA. If SBA requires a personal guarantee, refusal to provide the guaranty is a basis for declining an application. No personal guarantee is required for nonprofit organizations or Employee Stock Ownership Plans (ESOPs).

Loans $500,000 or less: • For profit businesses: Minimum credit score of 570 is required • Repayment ability of for-profit businesses will be determined by the owner’s credit score Loans greater than $500,000: • For profit businesses: Minimum credit score of 625 is required • For loans greater than $500,000, SBA will underwrite your loan and provide you with an opportunity to choose your loan amount, which must be equal to or less than the maximum eligible loan amount calculated by SBA. As part of its underwriting, SBA will perform a cash flow analysis for your business to confirm your business’s ability to repay the proposed COVID EIDL loan as well as your business’s existing debt obligations.

Applicants must be physically located in the United States or designated territory and must have suffered working capital losses due to the Coronavirus pandemic. The COVID EIDL application contains specific eligibility screening questions.

For-profit businesses other than sole proprietorships: The business must have a valid IRSissued tax identification number (TIN). Each owner, member, partner, or shareholders of 20% or more of the business must be a U.S. citizen, non-citizen national, or qualified alien with a valid Social Security Number. Sole proprietorships: U.S. citizens, non-citizen nationals, and qualified aliens with a valid Social Security Number are eligible for COVID EIDL loans. For more information on immigration status requirements, see SOP 50 30 9, Appendix 7. Lawful presence in the United States, alone, is not sufficient to establish that the individual is a qualified alien.

In addition to other eligibility requirements, businesses must meet SBA COVID EIDL size standards. You meet COVID EIDL size requirements if any of the following applies to you. You are: • A business that, together with affiliates, has not more than 500 employees; • An agricultural enterprise that, together with affiliates, has not more than 500 employees; • An individual who operates as a sole proprietorship, with or without employees, or as an independent contractor and, together with affiliates, has not more than 500 employees; • A cooperative that, together with affiliates, has not more than 500 employees; • A tribal small business concern, as described in 15 U.S.C. 657 a(b)(2)(C), with not more than 500 employees; • A business, including an agricultural cooperative, aquaculture enterprise, nursery, or producer cooperative (but excluding all other agricultural enterprises), with more than 500 employees that is small under SBA Size Standards; • A private nonprofit organization that is a non-governmental agency or entity that currently has an effective ruling letter from the IRS granting tax exemption under sections 501(c), (d), or (e) of the Internal Revenue Code of 1954, or satisfactory evidence from the State that the non-revenue producing organization or entity is a nonprofit one organized or doing business under State law, or a faith-based organization; • A business that, together with affiliates, has more than 500 employees and: o is assigned a NAICS code beginning with: 61 Educational Services;  71 Arts, Entertainment and Recreation;  72 Accommodation and Food Services;  213 Support Activities for Mining; Industry group;  3121 Beverage manufacturers;  315 Apparel Manufacturing;  448 Clothing and Clothing Accessories Stores;  451 Sporting Good, Hobby, Book and Music Stores;  481 Air Transportation;  485 Transit and Ground Passenger Transportation;  487 Scenic and Sightseeing Transportation;  511 Publishing Industries (except Internet);  512 Motion Picture and Sound Recording Industries;  515 Broadcasting (except Internet);  532 Rental and Leasing Services; and  812 Personal and Laundry Services. (You can determine what NAICS code corresponds with your business.); o employs not more than 500 employees per physical location; and o has no more than 20 locations (this includes the number of locations that your affiliates have, if any).

• Those that were not in operation on or before January 31, 2020 (“In operation” includes businesses that were in an organizing stage but had not yet opened for business. Evidence that you were in an organizing stage includes, but is not limited to business licenses, contractual agreements, purchase orders for machinery and equipment, advertisements, and employment classified ads) • Those that do not meet program size standards • Engaged in any illegal activities at the federal, state or local level (including sale of marijuana/cannabis) 7 • Loan packagers that earn more than 1/3 of gross annual revenue from packaging SBA loans • Earn more than 1/3 of annual gross revenue from gambling • Engaged in multi-level sales distribution, lending, investment, or real estate development or investment (other than rental properties) • Primarily engaged in political or lobbying activities • Applicant is a pawn shop that derived more than 50% of the previous year’s income from interest • Applicant is a life insurance company • Publicly owned nonprofit organizations other than tribal business concerns • Owned by a member of Congress • Presents live performances of a prurient sexual nature or derives income from the sale of related products or services • An entity where any owner of 50% or more of the entity is more than 60 days delinquent on child support obligations • Applicant or any 20% or more owners currently suspended or debarred from contracting with the Federal government or receiving Federal grants or loans • Any 20% or more owner of the applicant currently incarcerated • Any 20% or more owner of the applicant presently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction for any felony • Any 20% or more owner of the applicant, within the last 5 years, for any felony involving fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance, has 1) been convicted; 2) pleaded guilty; 3) pleaded nolo contendere; or 4) commenced any form of parole or probation (including probation before judgment)? • Any 20% or more owner of the applicant, in the past year, has been convicted of a felony committed during and in connection with a riot or civil disorder or other declared disaster • Bankruptcy: See “What is the impact of bankruptcy on eligibility?” below • Applicant is a business that operates as a franchise and is not listed on SBA’s Franchise Directory • Applicant business received revenue or rental income in 2019 and did not file a 2019 federal tax return

For COVID EIDL loans, an affiliated business (or “affiliate”) is any business in which an applicant business: • Owns at least 50 percent; or • Has a right to profit distributions of at least 50 percent; or 8 • Has the contractual authority to control the direction of the business. The affiliation will be determined as of any agreements in existence as of January 31, 2020.

If the Applicant business (or the owner, if the business is a sole proprietor or an independent contractor) is currently in bankruptcy: • The Applicant business is eligible if it is operating under an approved plan of reorganization under either a Chapter 5, Chapter 11, Chapter 12 or Chapter 13 bankruptcy. In order to receive COVID EIDL funds, Applicant must provide SBA with evidence of approval for the loan by the court/trustee for the bankruptcy case. • The Applicant business is NOT eligible if it: o Filed for either a Chapter 5, Chapter 11, Chapter 12 or Chapter 13 bankruptcy but no plan of reorganization has been approved o Filed for a Chapter 7 bankruptcy, is undergoing a liquidating Chapter 11, and/or is permanently closed (Applicant is not eligible)

If you were “in operation” before Jan. 1, 2020: 2019 Federal Income Taxes, including all schedules, for the applicant business (required) 2020 Federal Income Taxes, including all schedules, for the applicant business (if available) If the most recent Federal income tax return has not been filed, a year-end profit-and-loss statement and balance sheet for that tax year For nonprofit organizations, a complete copy of the organization's IRS tax-exempt certifications and complete copies of the three most recent years of "Statement of Activities" IRS Form 4506-T (You will complete this online when you apply) After loan approval and before loan closing: If your business is not a sole proprietorship, you will be required to provide a Board resolution or certificate of authority providing authority to commit the business to the COVID EIDL loan. You may use your own Board resolution or ODA Form P-022 –Resolution and Certification Form If you started being “in operation” on or between Jan. 1, 2020 and Jan. 31, 2020: 2020 Federal Income Taxes, including all schedules, for the applicant business (if available) If 2020 Federal Income Taxes for the applicant business are not available, you must submit internally or externally prepared business financial statements including balance sheet and profit and loss statement. For nonprofit organizations, a complete copy of the organization's IRS tax-exempt certifications and complete copies of the years of "Statement of Activities" since inception After loan approval and before loan closing: If your business is not a sole proprietorship, you will be required to provide a Board resolution or certificate of authority providing authority to commit the business to the COVID EIDL loan. You may use your own Board resolution or ODA Form P-022 –Resolution and Certification Form.

• SBA Form 2202 – Schedule of Liabilities • List of Real Estate Owned • SBA Form 413 – Personal Financial Statement for general partners, managing members, and all owners of 20% or more of the applicant business (Not required for nonprofit organizations)

• Copy of government-issued photo identification of each principal owning 20 percent or more of the applicant business • Current year-to-date profit-and-loss statement • For loans less than or equal to $500,000: Schedule of Liabilities listing all fixed debts (SBA Form 2202 may be used)

If you were in operation on or before January 31, 2020 and subsequently changed your legal organization (e.g., you were a sole proprietorship and then you incorporated your business), you must use the tax identification number and address that you used on your 2019 business federal tax return. SBA will check the financial information you provide in your application against the 2019 tax returns that you filed with the IRS. This is the purpose for having you complete the IRS Form 4506-T with your application. The IRS will not provide a verification if the data on your taxes does not match your COVID EIDL application. SBA will not approve your application without this IRS verification.

All owners, members, partners, or shareholders of 20% or more of the business must be: • US citizen with Social Security Number (SSN); or 10 • Non-US citizen who resides in the U.S. and is classified as a “non-citizen national” or “qualified alien” with SSN. Qualified aliens include permanent residents with a current green card

You must be able to prove your business was in operation on or before January 31, 2020. You may be asked to provide this documentation to prove your business was in operation on or prior to Jan. 31, 2020.

Businesses that had more than a 50 percent change of ownership after January 31, 2020 are ineligible unless the change in ownership involved a close family member or partner or the contract for sale existed prior to January 31, 2020.

The way you apply is determined by how you file your federal taxes. For example: • If you operate three locations but report all sales in one federal tax return, you should complete one application for all of your locations; • If you operate three locations and file a separate federal tax return for each location, you should complete a separate application for each location; • If you are a sole proprietor with multiple businesses: o If you report your business’s revenues on a single Schedule C, you should complete one application; o If each of your businesses has its own tax identification number and you file separate Schedules C, you should complete a separate application for each business

For loans up to $500,000, your maximum eligible loan amount is determined by a formula based on the date you began operations. You will have the opportunity to choose your loan amount, which must be equal to or less than the maximum eligible loan amount calculated by SBA. If you were in operation before January 1, 2019, your maximum eligible loan amount is calculated as follows: 2019 gross receipts or sales minus 2019 costs of goods sold multiplied by 2, or $500,000, whichever is less. For applicants that began operations partially through 2019 or 2020, SBA will calculate your maximum eligible loan amount. For applicants using rental loss, SBA will calculate your maximum eligible loan amount. For loans greater than $500,000, SBA will underwrite your loan. As part of its underwriting, SBA will perform a cash flow analysis for your business to confirm your business’s ability to repay the proposed COVID EIDL loan as well as your business’s existing debt obligations.

The lines used for gross receipts, costs of goods sold, and expenses vary by the entity tax return type. LLCs should follow the instructions that apply to their tax filing status in the reference periods.)

Businesses that are part of a corporate group may not receive more than $10,000,000 in COVID EIDL loans in the aggregate. Businesses that are part of a corporate group may not receive more than $10,000,000 in COVID EIDL loans in the aggregate. • You or your business has majority ownership, directly or indirectly in any other business that has a different tax identification from your business • Your business is majority owned, directly or indirectly, by a parent company that has a different tax identification number from yours.

The application and other legal documents (such as the note and the loan authorization agreement) that require the applicant’s signature must be signed by an individual authorized by the business to do so. Typically, this is the owner of the business, the CEO, or CFO.

Information on all owners who own 20 percent or more of the business is required to be included on the application, and at least 81 percent of the ownership must be accounted for on the application. For loans greater than $200,000, all owners who own 20 percent or more of the business, and any managing member or general partner, will be required to sign a personal guaranty

No. Do not submit more than one application, as this will delay SBA’s review of your application.

The last day that applications may be approved is December 31, 2021. Be sure to file your application as soon as possible to allow processing time for approval.