As U.S. businesses continue to recover from COVID-19’s economic devastation, the U.S. Small Business Administration (SBA) is expanding loan opportunities. The agency announced that beginning in April, nonprofits and small businesses will be able to borrow up to $500,000 for up to 24 months. This expansion of the COVID-19 Economic Injury Disaster Loan (EIDL) program more than triples the existing limit of six months and maximum loan amount of $150,000.
In a news release announcing the change, SBA Administrator Isabella Casillas Guzman said, “More than 3.7 million businesses employing more than 20 million people have found financial relief through SBA’s Economic Injury Disaster Loans, which provide low-interest emergency working capital to help save their businesses. However, the pandemic has lasted longer than expected, and they need larger loans.”
Businesses that have already applied for a COVID-19 EIDL loan need not worry about reapplying, as all applications in process will automatically be considered for the increased amounts. Similarly, instructions will be published to allow those who have already been approved for a loan to apply for the expanded limits. A loan increase can be requested via SBA.gov, and an email will go out to all previously approved borrowers containing this information.
The COVID-19 EIDL program has been extremely successful, with over $200 billion in loans already approved by the SBA. Small businesses, including independent contractors and sole proprietors, have been provided 30-year maturity loans at a 3.75% interest rate, while nonprofits will pay 2.75% in interest.
Additionally, the SBA announced on March 12th that borrowers for all disaster loans, including the COVID-19 EIDL loans, would be provided extended deferment periods. Although payments are not required until 2022, interest will still accrue on all outstanding loan balances, so borrowers may elect to begin making payments during the deferment period.
If you have any questions about the EIDL loan limit expansion and how it could affect your business, please contact our office.