COVID-19 Economic Injury Disaster Loans expanded; amounts increased

Today, President Joe Biden announced new changes to the COVID-19 Economic Injury Disaster Loan (EIDL) program, which provides long-term, low-cost loans to those impacted by the coronavirus (COVID-19) pandemic. According to the White House, the changes will allow more businesses to get greater and more flexible support from the $150 billion in loanable funds still available in the program. The following statement was released by the Biden Administration:

“First, the Small Business Administration (SBA) will increase the maximum amount of funding a small business can borrow through this program from $500,000 to $2 million, which can be used to hire and retain employees, purchase inventory and equipment, and pay off higher-interest debt. This increase will help small businesses: an SBA analysis of current COVID EIDL borrowers who qualify for the increase shows that more than 80 percent have 25 employees or less. The SBA will ensure that no small business has to start repaying these loans until two years after they receive the funding, so small businesses can get through the pandemic without having to worry about making payments.

Next, the SBA will make it easier for small businesses with multiple locations in hard-hit sectors like restaurants, hotels, and gyms to access these loans. To ensure that taxpayer dollars are used to support businesses that truly need help, the SBA has implemented tightened controls and will collaborate closely with the SBA Inspector General to monitor the program.

Lastly, to ensure that Main Street businesses have additional time to access remaining funds, the SBA will offer a 30-day exclusive window of access where only small businesses seeking loans of $500,000 or less will receive awards after the new improved loan product launches.”

Click here to learn more about EIDL.

Today’s announcement also included a plan for streamlining the Paycheck Protection Program (PPP) loan forgiveness for small loans.

According to the statement: “Through the PPP, the SBA has made more than 11 million loans to small businesses that can be forgiven and taken off of their books if they use the funds to keep employees on payroll. In order to receive forgiveness, borrowers have to complete an application with their PPP lender. The President’s plan will make it easier for more than 3.5 million PPP borrowers with loans of $150,000 or less to get their loans wiped clean.”

Under the new approach, SBA sends a pre-completed application form to the borrower who can review, sign and send back to SBA, which then works with the lender to complete the forgiveness process. Since launching this new process on Aug. 4th, more than 820,000 small businesses have applied for forgiveness, with borrowers spending an average of six minutes on the application and 60 percent of applicants completing the process on their mobile phone. SBA expects more than 2.5 million additional small businesses to take advantage of this streamlined process in the months ahead, helping them avoid needless bureaucracy and avoid costly principal and interest payments on their loans.”

Click here to learn more about PPP.