The U.S. Small Business Administration recently announced enhancements to the COVID Economic Injury Disaster Loan program, a federal disaster relief loan designed to better serve and support small business communities still reeling from the pandemic, especially hard-hit sectors such as restaurants, gyms and hotels. The SBA is ready to receive new applications immediately from small businesses looking to take advantage of new policy changes.
“The SBA’s COVID Economic Injury Disaster Loan program offers a lifeline to millions of small businesses who are still being impacted by the pandemic,” said SBA Administrator Isabella Casillas Guzman. “We’ve retooled this critical program – increasing the borrowing limit to $2 million, offering 24 months of deferment, and expanding flexibility to allow borrowers to pay down higher-interest business debt.
“We have also ramped up our outreach efforts to ensure we’re connecting with our smallest businesses as well as those from low-income communities who may also be eligible for the companion COVID EIDL Targeted Advance and Supplemental Advance grants totaling up to $15,000. Our mission-driven SBA team has been working around the clock to make the loan review process as user-friendly as possible to ensure every entrepreneur who needs help can get the capital they need to reopen, recover and rebuild.”
Changes announced by the SBA include:
Increasing the COVID EIDL cap: The SBA will lift the COVID EIDL cap from $500,000 to $2 million. Loan funds can be used for any normal operating expenses and working capital, including payroll, purchasing equipment and paying debt.
Implementation of a deferred payment period: The SBA will ensure small business owners will not have to begin COVID EIDL repayment until two years after loan origination so that they can get through the pandemic without having to worry about making ends meet.
Establishment of a 30-day exclusivity window: To ensure Main Street businesses have additional time to access these funds, the SBA will implement a 30-day exclusivity window of approving and disbursing funds for loans of $500,000 or less. Approval and disbursement of loans over $500,000 will begin after the 30-day period.
Expansion of eligible use of funds: COVID EIDL funds will now be eligible to prepay commercial debt and make payments on federal business debt.
Simplification of affiliation requirements: To ease the COVID EIDL application process for small businesses, the SBA has established more simplified affiliation requirements to model those of the Restaurant Revitalization Fund.
The enhancements to the COVID EIDL program aim to allow more businesses greater and more flexible support from the over $150 billion in available COVID EIDL funds. Additionally, these changes aim to help entrepreneurs access capital at a time when, according to a recent Goldman Sachs 10,000 Small Business survey, 44 percent of small business owners report having less than three months of cash reserves, and only 31 percent reporting confidence in gaining access to funding.
Eligible small businesses, nonprofits and agricultural businesses in all U.S. states and territories can apply. Visit sba.gov/eidl to learn more about eligibility and application requirements. The last day that applications may be received is Dec. 31. All applicants should file their applications as soon as possible.
Call 1-800-659-2955 or email DisasterCustomerService@sba.gov for assistance.