Economic Injury Disaster Loans Update
The U.S. Small Business Administration is more than tripling the maximum amount that small businesses and nonprofits can borrow under the COVID-19 Economic Injury Disaster Loans (EIDL) program.
Starting the week of April 6, the loan limit for COVID-19 EIDL loans will jump from six months of economic injury with a maximum loan amount of $150,000 to up to 24 months of economic injury with a maximum loan amount of $500,000.
The SBA’s Economic Injury Disaster Loans provide low-interest emergency working capital to small businesses. Any COVID-19 EIDL loans in process when the new loan limits go into effect will automatically be considered for the new maximum limits, the SBA said. Existing COVID-19 EIDL borrowers will be able to request an increase beginning April 6. The SBA will provide updated instructions on how to request a loan increase on SBA.gov and also will reach out directly via email to existing COVID-19 borrowers with loans approved prior to the increased loan limit taking effect.
The SBA has approved more than $200 billion in COVID-19 EIDL loans. The loans have a 30-year maturity with interest rates of 3.75% for small businesses, including sole proprietors and independent contractors, and 2.75% for not-for-profits.
Deferred EIDL Payments
The SBA also announced March 12 that it was extending deferment periods for all its disaster loans, including the COVID-19 EIDL loans. COVID-19 EIDL recipients will not need to start making payments on their loans until 2022, though borrowers may voluntarily continue to make payments during the deferment as interest will continue to accrue on the outstanding loan balance.
Targeted EIDL Advance Grants
The American Rescue Plan Act of 2021 provided an Additional $15B in funding for Targeted EIDL Advance Grants.
- Businesses located in low-income communities
- No more than 300 employees
- Suffered an economic loss of more than 30%, as determined by the amount that the entity’s gross receipts declined during an eight-week period between March 2, 2020, and Dec. 31, 2021, relative to a comparable eight-week period immediately preceding March 2, 2020.
Eligible businesses and nonprofit organizations that received a previous EIDL Advance in an amount less than $10,000 will have first priority to apply for the Targeted EIDL Advance and will be the first group to receive SBA email invitations to the application portal. To apply, you must receive an SBA e-mail invitation.
The second priority group are eligible businesses and nonprofit organizations that applied for EIDL assistance before December 27, 2020 but did not receive an EIDL Advance because available funding was exhausted in mid-July 2020.
[Note: Businesses and nonprofit organizations with COVID-19-related losses can still apply for an Economic Injury Disaster Loan (EIDL), if they have not done so already. More information about the loan program can be found at www.sba.gov/coronavirusrelief.]
Please contact your Warady & Davis LLP advisor with your questions at 847-267-9600; email@example.com.
You can also visit the Warady & Davis LLP COVID-19 Resource Center for a wealth of information on stimulus assistance, new legislation and much more. This information is updated regularly.
SOURCE: SBA and AICPA