SBA Updates COVID Disaster Loans by Increasing Funding Cap, Extending Deferral, and Streamlining Applications for Smaller Businesses
The Small Business Administration on Thursday announced several changes to the organization’s COVID-19 relief loans, including increasing the funding cap, offering a longer deferral, and making certain loans exclusive for small businesses. .
The COVID Economic Injury Disaster Loan (EIDL) program has been set up to provide support to small businesses, such as restaurants, gyms and hotels, amid the economic crisis triggered by the pandemic.
Loan financing can be used for operating expenses and working capital, including payroll, equipment purchase, and debt repayment. The SBA has also expanded the permitted uses of funds to include early repayment of commercial debt and payment of federal commercial debt.
On Thursday, the SBA announced it had increased its funding cap from $ 500,000 to $ 2 million. When a business receives the loan, the SBA said it would not be required to begin repayment for two years after the date of the loan.
The 30-year loans have a fixed interest rate of 3.75% for businesses and 2.75% for private non-profit organizations.
The updates also provided a 30-day exclusivity window for smaller businesses across the country. The SBA will implement the 30-day window for approval and disbursement of loans of $ 500,000 or less. Approval for loans over $ 500,000 will begin after.
“The SBA’s COVID Economic Disaster Loan Program provides a lifeline for millions of small businesses that are still affected by the pandemic,” SBA Administrator Isabella Casillas Guzman said in a statement. . “… Our mission-driven SBA team has worked tirelessly to make the loan review process as user-friendly as possible to ensure that every entrepreneur who needs help can get the capital they need to reopen.” , recover and rebuild. “
The SBA has said it has more than $ 150 billion in EIDL COVID funds.
Small businesses, nonprofits, and farm businesses in all U.S. states and territories can apply through www.sba.gov/eidl. The deadline for submitting applications is December 31.
The SBA said it sped up its loan application process from about 2,000 applications per day last year to over 37,000 more recently.