SBA Updates for Paycheck Protection and Economic Injury Disaster Loan Programs
The SBA’s PPP and EIDL Programs have been an invaluable support to numerous businesses since the initiation of the economic shutdown and mandates caused by COVID-19 in 2020. Each program has been enhanced and extended to help entrepreneurs as this pandemic continues.
On March 30th, President Biden signed a bipartisan extension for the Paycheck Protection Program (PPP). The deadline to apply for a PPP loan has been extended from March 31 to May 31. This law will give the Small Business Administration additional time to process applications authorize loans until June 30th.
According to the SBA, as of March 28, the Paycheck Protection Program has approved more than 8.7 million loans totaling more than $734 billion since the programs have been instituted. 78.4% of 2021 PPP loans are $50,000 and under, and the average loan is $59,000.
Recent program equity enhancements by the Biden administration, aimed to increase loan distribution, have increased lending among women and minorities. The Small Business Administration reported during this two-week exclusive window, minority-owned business loans were up 20%, women-owned business loans were up 14%, and rural small business loans were up 12% over the previous 10 days.
According to the SBA, the EIDL program has supported 3.7 million businesses and 20 million employees of small businesses.
On March 24, 2021, the SBA announced that the maximum amount small businesses and non-profit organizations can borrow through the COVID-19 Economic Injury Disaster Loan (EIDL) program would increase. Starting the week of April 6, 2021, the limits will increase a maximum loan amount of $150,000 to a maximum loan amount of $500,000.
Prior to April 6, businesses that currently hold a loan will be directly contacted by the SBA via email, with guidance about how to request an increase. Any new loan applications or any loans currently in process will automatically be considered for loans covering 24 months of economic injury up to a maximum of $500,000.
On March 12, 2021, the SBA announced that deferment periods for all disaster loans, including COVID-19 EIDLs, will be extended until 2022 to offer more time for businesses to recover. The first payment due for disaster loans made in 2020 will be deferred 24-months from the date of the loan. All 2021 loans will be deferred 18-months from the date of the loans.
We will continue to provide additional updates for these programs. There is a lot of available information to assist business owners experiencing pandemic-related financial difficulties in learning about options and getting assistance. Contact us today to review your options.
Kimberly is an Audit Manager at Wilke & Associates, CPAs. Her background includes preparing individual tax returns, performing audits, and preparing financial statements.