The Economic Injury Disaster Loans (EIDL) Program Is Expanding In A Big Way
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On March 24, 2021, the U.S. Small Business Administration (SBA) announced that it is increasing the loan limit of the COVID-19 Economic Injury Disaster Loan (EIDL) program. Starting the week of April 6, 2021, the loan limit will be increased from a maximum of $150,000 to cover 6 months of economic distress to $500,000 to cover 24 months of economic distress.
What does this mean for existing loans?
Businesses that received a loan subject to the current loan limit do not need to submit a request for an increase at this time. SBA will reach out directly via email closer to the April 6, 2021 implementation date to provide more details about how businesses can request an increase.
Also, in a separate news release, the SBA announced that the deferment periods of EIDL and all disaster loans is be extended. The first payment due date for disaster loans made in 2020 is 24 months after loan approval; the first payment for all loans made in 2021 is 18 months after approval.
What does this mean for new loans?
For any new loan applications or those in the process the week of April 6, the new limits will automatically be considered.
What is the EIDL program?
The EIDL program is a long-term, direct loan from the SBA that can be repaid over a period of up to 30 years at a fixed rate of 3.75% for businesses.
EIDL proceeds can be used to cover a wide array of working capital needs and normal operating expenses, such as the continuation of health care benefits, rent, payroll, utilities, and fixed debt payments.
Can my business apply for and receive an EIDL if I received a Paycheck Protection Program (PPP) loan?
Yes. But you cannot use the funds from both loans for the same purpose. For example, you cannot use both loans for payroll expenses. However, if you are using a PPP loan for payroll expenses and not for rent, you may use the EIDL loan for rent.
Is my business eligible for an EIDL?
The EIDL program is a loan program for the following groups in the U.S. or a U.S. territory that have suffered working capital losses due to the pandemic.
Small businesses with 500 or fewer employees
Most private nonprofits
Certain agricultural businesses with 500 or fewer employees
Sole proprietorships and independent contractors
For additional details, visit: https://www.sba.gov/funding-programs/loans/covid-19-relief-options/covid-19-economic-injury-disaster-loan
Is an EIDL right for my business?
Maybe. To understand whether it's right for your business, we need to know where you are and where you want to go, so let's talk. Contact us to schedule a meeting with one of our advisory experts.