We have good news for our business clients. The Small Business Administration (SBA) has increased the loan limits for the COVID-19 Economic Injury Disaster Loan (EIDL) program starting April 6, 2021, which means you may be eligible to receive additional loan funds for up to 24 months of economic injury with a maximum loan amount of $500,000. Any new loan applications and any loans in process when the new loan limits are applied will automatically be considered for loans covering up to the new maximum.
SBA Administrator Guzman said that: “More than 3.7 million businesses employing more than 20 million people have found financial relief through SBA’s Economic Injury Disaster Loans, which provide low-interest emergency working capital to help save their businesses. However, the pandemic has lasted longer than expected, and they need larger loans. Many have called on SBA to remove the $150,000 cap. We are here to help our small businesses and that is why I’m proud to more than triple the amount of funding they can access.”
For loan amounts over $25,000, SBA will continue to take a security interest in business assets evidenced by a general security agreement and UCC filing. SBA will also require an unsecured personal guarantee for loan amounts over $200,000 from any individual with 20 percent or more ownership. Real estate collateral will not be required for any loans of $500,000 or less.
The first payment due date for all loans are also extended until 2022. For COVID-19 EIDL loans made in calendar year 2020 and 2021, the first payment due date is extended until 24 and 18 months from the date of the note respectively. Loan interest will continue to accrue during the deferment period, and a loan increase will not further extend the first payment due date.
According to the SBA press release on March 24: ‘‘This new relief builds on SBA’s previous March 12, 2021 announcement that the agency would extend deferment periods for all disaster loans, including COVID-19 EIDLs, until 2022 to offer more time for businesses to build back. In order to shift all EIDL payments to 2022, SBA will extend the first payment due date for disaster loans made in 2020 to 24-months from the date of the note and to 18-months from the date of the note for all loans made in the calendar year 2021’’.
Businesses that have received a loan subject to the current limits do not need to submit a new EIDL application at this time because SBA will reach out directly through email and provide more details about how businesses can request an increase. Requests will be processed in the order they are received. Due to the expected high volume of incoming requests, it may be several weeks before you receive a response from SBA on next steps to follow. Please make sure to submit your request as soon as possible.