The U.S. Small Business Administration (SBA) recently announced updates to the Economic Impact Disaster Loan (EIDL). As part of COVID-19 relief, the SBA approved more than $200 billion in EIDL loans for small businesses and nonprofit organizations. The loans have interest rates of 2.75% for nonprofits and 3.75% for small businesses with a 30-year maturity.
Under the new guidance, businesses who received an EIDL may be eligible for additional benefits.
One of the major components of the updated guidance includes an extension of deferred payments. Businesses who received an EIDL will now have more time to repay the loan, with payment due dates extended until 2022.
For businesses that received an EIDL in 2020, the first payment will be due 24 months from the original due date. This is an extension from 12 months. For businesses that received an EIDL in 2021, the first payment will be due 18 months from the original due date. This is an extension of 12 months.
Businesses are also now eligible for an extension of principal and interest payments until March 31, 2022 for existing disaster loans that were approved in 2020 and have been in regular servicing status since March 1, 2020.
While the extensions are available, interest will continue to accrue on the loan balance during the deferral period. To avoid interest, you can make voluntary payments during the deferral period.
There is also a $5,000 Supplemental Targeted Advance available for businesses that meet the following criteria:
To be considered for the additional $5.000, businesses must apply for the Targeted EIDL Advance. Businesses that are potentially eligible will then be contacted by the SBA. Any business that meets the criteria and applied for the Targeted EIDL Advance before April 22, 2021 can contact the SBA to let them know they want to be considered for the Supplemental Targeted Advance.
Every situation is different and unique. If you have questions about EIDL and would like to speak to an accounting professional, please contact BSB today. We will help you plan according to your specific circumstances.