Over the past several weeks, President Joe Biden’s administration is ardently increasing its efforts to get more Americans vaccinated against COVID-19 as the coronavirus Delta variant rages across the country. The White House has been gradually releasing sweeping COVID-19-related mandates including vaccine mandates for nursing home employees, federal workers and federal contractors, and large employers. In addition to these efforts combatting the surge caused by the Delta variant, the Biden Administration has called upon the Small Business Administration (SBA) to increase financial support for small businesses. Specifically, the SBA is strengthening its COVID-19 Economic Injury Disaster Loan (EIDL) program by increasing available loan amounts from $500,000 to $2 million.
There are a number of eligibility requirements for EIDLs. Employers must have certain credit ratings, have suffered working capital losses due to the pandemic, be physically located in the United States and have fewer than 500 workers, among other stipulations.
Loans that are part of the COVID-19 EIDL program are independent of the Paycheck Protection Program (PPP) loans introduced earlier in the pandemic. Employers can apply for loans from both programs. However, it’s important to note that while PPP loans are forgivable, EIDL loans are not.
LOAN USE REQUIREMENTS
The SBA will soon be allowing eligible small businesses to obtain loans worth $2 million, four times the previous limit. These funds may be used for virtually any operating expense, including:
- Equipment purchases
Funds may NOT be used for:
- Expanding a business
- Starting a new business
- Paying debts owned by a federal agency
EIDLs are paid back over 30 years with fixed interest rates—3.75% for businesses and 2.75% for private nonprofit organizations. Payments are deferred for 24 months (during which interest will accrue) from the date of the first disbursement.
LOAN APPLICATION DEADLINE
Until Oct. 8, 2021, the SBA will only be approving loans of $500,000 or less. This helps prioritize the smallest businesses that may need funds the most immediately. After this time, eligible businesses will be able to apply for up to $2,000,000 in loans until Dec. 31, 2021.
Employers can visit the SBA website for full details of this latest EIDL. Additionally, the SBA published some frequently asked questions (FAQs) to help address specific employer questions. This FAQ includes the specific details related to the EIDL program, including an exhaustive list of employer eligibility requirements. Stay up to date with pandemic news and vaccine information by following us on Twitter or LinkedIn.