The SBA announced several policy changes to the COVID-19 Economic Injury Disaster Loan (EIDL) program effective September 8, 2021.
The loan cap has been increased from $500,000 to $2,000,000. The SBA will calculate the maximum loan amount by taking 2019 gross sales less 2019 cost of goods sold and multiplying by 2, or $500,000, whichever is less.
More flexibility has also been granted in the allowable use of funds. The funds can now be expended to pay and prepay commercial debt incurred in the past, present, or future. Additionally, regular payments may be made on federal debt.
The increase can be requested via the COVID EIDL portal if you already have a loan, while a business applying for the first time should complete the online COVID EIDL application. Decisions on loans over $500,000 will occur on October 8, 2021, at the earliest.
The program will end on December 31, 2021, or when funds are exhausted. The SBA also provided a timeline of 6 weeks to process loan increase requests; therefore, businesses should act quickly to take advantage of the 3.75% interest rate over a 30-year term.
The deferment period has also been pushed back for current and future EIDL loans to 24 months from the loan origination date.
Contact us today to review programs available to assist business owners experiencing pandemic-related financial difficulties.
Kimberly is an Audit Manager at Wilke & Associates, CPAs. Her background includes preparing individual tax returns, performing audits, and preparing financial statements.