Many companies continue to feel the negative financial impacts of the COVID-19 pandemic. While many relief options have supported small businesses, a large number of organizations find themselves in need of greater financial resources or additional time to repay loans they took out to bridge the gap during this challenging season. With this in mind, the Small Business Administration (SBA) has updated the COVID-19 Economic Injury Disaster Loan (EIDL) program to provide more capital, increased flexibility, and extended repayment options for these low-interest, fixed-rate, long-term loans.
According to the SBA, the following COVID EIDL policy changes have taken effect:
- Loan cap increased from $500,000 to $2 million for those with a minimum credit score of 625, UCC-1 and business real estate for collateral, and a personal guarantee greater than $200,000
- Use of funds expanded to apply to payment and prepayment of commercial debt incurred at any time (past or future) and regularly scheduled payments of federal debt (including Guaranteed and Direct Loan)
- Deferment period extended to 24 months from origination for all loans (existing loans with a less than 24-month deferment will be adjusted)
- Affiliation requirements simplified; affiliation now defined as a business you control or in which you have 50% or more ownership
- Path added to meet program size standards for businesses who meet all of the following conditions:
- a NAICS code beginning with 61, 71, 72, 213, 3121, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812
- no more than 500 employees per physical location
- no more than 20 locations
- ability to meet all other COVID EDITL eligibility requirements
- Limit of $10 million added on maximum aggregate COVID EIDL loans to a single corporate group.
Businesses who previously participated in the EIDL program can apply to access increased funds, and the SBA continues to accept first-time applications as well. Our team can help you understand how the changes impact your business and determine whether first-time or further application to the EIDL program will benefit your company.
Speak with a Hantzmon Wiebel team member today to determine the right next step for your business.
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Our firm provides the information in this article for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this blog are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability and fitness for a particular purpose.