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Source : Isabel Guzman
September 9, 2021
Author : Alex Bustillos
The Small Business Administration is making major changes to the Economic Injury Disaster Loan (EIDL) program, allowing a far greater number of businesses to become eligible. The changes will also affect how businesses are allowed to spend their loan money.
These updates are sure to be music to the ears of many small business owners who have struggled getting loans from the problem-plagued program.
The changes went into effect on Wednesday this week and include a number of significant measures, including raising the loan cap to $2 million, implementing a deferred payment program, expanding eligible use of funds, and simplifying “affiliation requirements.”
Additionally, there will be a 30-day exclusivity window meant to expedite loans to small businesses. “To ensure Main Street businesses have additional time to access these funds, the SBA will implement a 30-day exclusivity window of approving and disbursing funds for loans of $500,000 or less,” the SBA press release states. “Approval and disbursement of loans over $500,000 will begin after the 30-day period.”
Previously, the loan cap was set at $500,000. Loans can be used to fund “normal operating expenses and working capital, including payroll, purchasing equipment, and paying debt.”
Furthermore, loans won’t have to be paid off until two years after the loan date due to the new deferred payment program.
“The enhancements to the COVID EIDL program will allow more businesses greater and more flexible support from the over $150 billion in available COVID EIDL funds,” the press release states “Additionally, these changes will help entrepreneurs access capital at a time when, according to a recent Goldman Sachs 10,000 Small Businesses survey, 44 percent of small business owners report having less than three months of cash reserves, and only 31 percent reporting confidence in gaining access to funding.”
“The SBA’s COVID Economic Injury Disaster Loan program offers a lifeline to millions of small businesses who are still being impacted by the pandemic. We’ve retooled this critical program – increasing the borrowing limit to $2 million, offering 24 months of deferment, and expanding flexibility to allow borrowers to pay down higher-interest business debt,” SBA Administrator Isabella Casillas Guzman said. “We have also ramped up our outreach efforts to ensure we’re connecting with our smallest businesses as well as those from low-income communities who may also be eligible for the companion COVID EIDL Targeted Advance and Supplemental Advance grants totaling up to $15,000. Our mission-driven SBA team has been working around the clock to make the loan review process as user-friendly as possible to ensure every entrepreneur who needs help can get the capital they need to reopen, recover and rebuild.”