The obvious answer to the question, “What does EIDL Round 2 mean for your business?” is money. Congress authorized the second loan to provide funds to businesses still struggling because of the COVID-19 public health crisis. Unlike Payroll Protection Program (PPP) loans, EIDL loans are not forgivable but do offer favorable terms. However, to maintain eligibility, business owners should be aware of Small Business Administration (SBA) requirements regarding backup documentation for their loans.
The Resolution of the Board and EIDL Round 2
The company must submit a board resolution authorizing the loan application and acceptance. The SBA provided a template titled “Resolution of Board of Directors of ______.” Whether using the template or preparing your own, touch base with your business lawyer or corporate counsel to make sure you include all the pertinent information.
For example, the SBA requires that the resolution state:
- That the board of directors/members/managing partners held a meeting.
- The date the meeting was held.
- Language confirming that the members/managing partners agree to obtain the EIDL Round 2 loan.
- How much the company received.
The form also must be signed by all board members or partners that would ordinarily sign a corporate resolution. Also, be sure to include verification that the signatories have the authority to sign on behalf of the company.
The resolution is technically due 180 days from the disbursement date of your company’s EIDL Round 2 loan. However, that date might have passed before you learned of this requirement. If so, just submit the resolution as soon as possible.
Proof of Hazard Insurance for Your Business
The SBA requires businesses that accepted EIDL round 2 loans to submit proof of hazard insurance. You can do this by providing the declarations page from your company’s insurance policy.
Make sure you include the following:
- Proof that at least 80% of the insurable value of the business contents are covered.
- The policy must include hazard coverage over and above liability insurance.
- Your company’s correct business name and address.
You do not have to list the SBA as a loss payee. If your insurance is about to be renewed, the SBA asks that you ensure there’s enough coverage to satisfy its requirements.
The proof of insurance is due 12 months from the date your EIDL round 2 loan was disbursed.
Talk to a Business Lawyer About Your Business Needs and Completing EIDL Round 2 Requirements
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.