The U.S. Small Business Administration’s Economic Interest Disaster Loan (EIDL) program is one of the biggest relief options enacted by the federal government to support small businesses’ recovery from the economic impacts of COVID-19. It’s also the only remaining SBA relief program open to small business owners until the end of the year.
As of November 18, the SBA has approved more than 3.84 million EIDL loans for more than $298 billion, according to SBA data.
Recently, the agency announced significant changes to the EIDL program to better support small businesses. Here are what every business owner should know.
- Higher loan amounts are now available. The loan cap was increased from $500,000 to $2 million, which can be paid back over 30 years at a 3.75% fixed interest rate for businesses.
- The allowable use of funds has been expanded. Funds can now be applied to payment and prepayment of commercial debt and regularly scheduled payments of federal debt.
- The deferment period has been extended. All loans are now allowed 24 months of deferment from loan origination. Existing loans with less than 24-month deferment will be adjusted.
- Simpler affiliation rules for all industries have been implemented. Affiliation requirements have been simplified. An affiliate is a business that you control or in which you have 50% or more ownership.
- Industries uniquely impacted by COVID-19 and continue to experience significant economic hardship may apply for the program. The SBA created an additional way to meet program size standards for businesses assigned a NAICS code beginning with 61, 71, 72, 213, 3121, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812 that have no more than 500 employees per physical location, have no more than 20 locations, and that meet all other EIDL eligibility requirements.
- A maximum cap on corporate groups has been introduced. The SBA added a $10 million limit on maximum aggregate EIDL loans to a single corporate group. Entities are part of a single corporate group if they are majority-owned, directly or indirectly, by a common parent.
Small businesses have until December 31, 2021 to apply for an EIDL loan. However, we recommend applying for the program as soon as possible.
For more information about COVID EIDL, check out SBA’s FAQ page.
If you need assistance with EIDL loan bookkeeping or in connecting with your SBA lender, please feel free to send us a message at firstname.lastname@example.org. Our team of tax professionals at Stephano Slack will be glad to assist you. To learn more about our services, visit www.stephanoslack.com/services today.