I spoke to a borrower yesterday who needs $350K for his business.  His dilemma is to wait for the SBA to hopefully approve his EIDL extension, or go and apply for a conventional SBA loan.

As previously discussed, several weeks ago, the SBA announced that the agency was increasing the maximum EIDL loan to $500K from $150K and asked borrowers to email them to get into the queue for the loans.  While I know some borrowers who have subsequently been asked for additional information after the first email, I don’t know anybody who has gotten further than the second step.  (If a reader has – please let me know).

I suspect that the overstretched SBA is sorting out how to prioritize and process these applications. Out of fairness to them, it’s a lot of work – and I don’t think they have finalized the rules.

So what should the borrower who needs the money do?  My advice was that as in his case, he was likely eligible for a conventional SBA loan, it was probably wise to start that process today.  While the terms of traditional SBA loans aren’t as good as the EIDL loans, he might be waiting for a long time and be in a dark hole by just waiting. And if the EIDL comes in, he can always prepay the conventional SBA loan.

Let me be clear: not every borrower who is waiting for an EIDL extension would have a chance to get conventional SBA funding today.  If you're in this bucket – unfortunately, your only choice is to play the waiting game.