The U.S. Small Business Administration (SBA) announced that they have retooled the COVID Economic Injury Disaster Loan (EIDL) program to assist businesses that are still recovering from the impacts of COVID-19. The COVID EIDL program is different from regular EIDLs and is intended only for businesses that were open in 2019, when the pandemic began. Key changes include:
- Increasing the COVID EIDL Cap. The SBA will increase the COVID EIDL cap from $500,000 to $2 million. Loan funds can be used for any normal operating expenses and working capital, including payroll, purchasing equipment, and repaying debt.
- Implementation of a Deferred Payment Period. The SBA will ensure small-business owners will not have to begin COVID EIDL repayment until two years after loan origination so that they can get through the pandemic without having to worry about making ends meet.
- Expansion of Eligible Use of Funds. COVID EIDL funds will now be eligible to prepay commercial debt and make principal and interest payments on debt owned by the federal government.
- Establishment of a 30-Day Exclusivity Window. To ensure small 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. Approval and disbursement of loans over $500,000 will begin after the 30-day period.
The interest rate on the 30-year loans remains at 3.75% for businesses and 2.75% for non-profits. Businesses that have received previous loans through the SBA’s Paycheck Protection Program and Restaurant Revitalization Fund can still apply for COVID EIDL. Businesses who already have applied for COVID EIDL have the option of increasing their loan amount. All questions about the updated COVID EIDL program can be directed to the SBA’s Customer Service Center at 1-800-659-2955 between 8:00 a.m. and 8:00 p.m. ET, Monday through Friday.