The U.S. Small Business Administration (SBA) announced major enhancements to the COVID-19 Economic Injury Disaster Loan (EIDL) program, a federal disaster relief loan designed to support small business communities still reeling from the COVID-19 pandemic.
The SBA recently said it is 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 says. “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.”
The SBA also ramped up its outreach efforts to connect with the smallest businesses as well as those from low-income communities who may also be eligible for the companion COVID-19 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,” Guzman adds.
Key changes being 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 will allow more businesses greater and more flexible support from the over $150 billion in available COVID EIDL funds. Additionally, these changes are said to help entrepreneurs access capital at a time when, according to a recent Goldman Sachs 10,000 Small Businesses survey, 44% of small business owners report having less than three months of cash reserves, and only 31% reporting confidence in gaining access to funding.
For more information and to apply, go here. The last day that applications may be received is Dec. 31, 2021.
This article originally appeared on our sister publication Security Sales & Integration‘s website.