CFO Report: COVID EIDL Limit is Now $2 Million - Palma Financial

If you’re a CFO, take note: The SBA has quadrupled the COVID-19 EIDL limit to $2 million.

The Small Business Administration is officially raising the cap on its Economic Injury Disaster Loan program to $2 million, the agency announced Thursday.

The U.S. Small Business Administration (SBA) announced significant modifications to the COVID-19 Economic Injury Disaster Loans (EIDL) program, including raising the loan cap from $500,000 to $2 million and adding business debt payments to the list of ways businesses can use the loan proceeds.

In a news release issued late Thursday afternoon, the SBA said it was implementing the changes to make it easier for the small business communities still reeling from the pandemic, especially hard-hit sectors such as restaurants, gyms, and hotels, to access the more than $150 billion in funding available for loans.

The following fundamental changes were announced. All are effective immediately:

  • Increasing the COVID-19 EIDL cap from $500,000 to $2 million: Loan proceeds can be used for ordinary operating expenses and working capital, including meeting payroll, purchasing equipment, and paying a debt. COVID-19 EIDL funds are now also eligible to prepay commercial debt and make payments on federal business debt. Ask your CFO or book an appointment with us for specifics on your small business’s eligibility. 


  • Implementation of a deferred payment period: The SBA said small business owners will not have to begin COVID-19 EIDL repayments until two years after loan origination. Payments are deferred for the first two years (during which interest will accrue), and principal and interest payments are made over the remaining 28 years. The agency previously had implemented an 18-month deferment period for loans made during 2021.


  • Establish a 30-day exclusivity window: To ensure Main Street businesses have additional time to access these funds, the SBA said it is implementing a 30-day exclusivity window of approving and disbursing funds for $500,000 or fewer loans. Approval and disbursement of loans over $500,000 will begin after 30 days.


  • Simplification of affiliation requirements: To ease small businesses’ COVID-19 EIDL application process, the SBA established more simplified affiliation requirements to mimic those of the $28.6 billion Restaurant Revitalization Fund.

The COVID-19 EIDL program runs through Dec. 31, offers 30-year loans with fixed interest rates of 3.75% for small businesses, including sole proprietors and independent contractors, and 2.75% for not-for-profits. 

The new rule allows COVID-19 EIDL recipients to use loan proceeds to make debt payments, including monthly installments, deferred interest, and pre-payment on business debt. The duplicate payments, except for pre-payments, are now permitted on loans from federal agencies (including the SBA) and licensed Small Business Investment Companies (SBICs).

COVID-19 EIDL recipients may use loan proceeds to pay the debt incurred before and after submitting the loan application. Previously, the funds could be used only for working capital needed to sustain the business until it could resume normal operations. Still not sure of your eligibility? A CPA or CFO can help. 

Our company has secured countless EIDLs for Small Businesses. It is time to secure your loan, so you can concentrate on what you do best, running your business!! Get your CFO on board – let’s discuss more in a strategy session. Book Your EIDL Free Assessment Here.