SBA Administrator Isabella Casillas Guzman announced significant enhancements to the COVID Economic Injury Disaster Loan (EIDL) program, a federal disaster relief loan designed to better serve and support our small business communities still reeling from the pandemic, particularly hard-hit sectors such as restaurants, gyms, and hotels.
The SBA said they are ready to receive new applications immediately from small businesses looking to take advantage of these 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,” SBA Administrator Isabella Casillas Guzman said.
“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. “
Guzman added: “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.”
- COVID EIDL Cap Increased: 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.
- Deferred Payment Period Implemented:The SBA will ensure that small company owners do not have to begin COVID EIDL payments until two years following loan origination, allowing them to weather the epidemic without worrying about making ends meet.
- 30-Day Exclusivity Window Established: COVID EIDL money can now be used to prepay commercial debt as well as make payments on government corporate debt.
- Affiliation requirements Simplified: To make the COVID EIDL application process easier for small companies, the SBA has reduced affiliation criteria modeled after the Restaurant Revitalization Fund.
The improvements to the COVID EIDL program will provide more firms with better and more flexible support from the more than $150 billion in COVID EIDL funds available.
The SBA added that ” these changes will help entrepreneurs access capital at a time when, according to a recent Goldman Sachs 10,000 Small Businesses 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.”