As your virtual CFO, we have news. 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 this month, 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.
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.
However, securing the loan has become a frustrating process for some business owners.
SBA disaster loan process has gone from ‘stupidly easy’ to a bureaucratic saga, applicants say.
Don’t give up on the life saving EIDL.
As your virtual CFO, we have devised a process to expedite the appeal process and to secure loans for our clients.
Our company has secured countless EIDLs for small businesses. Let us be your virtual CFO. It is time to secure your loan, so you can concentrate on what you do best, running your business!! Let’s discuss more in a strategy session. Book Your EIDL Free Assessment Here.