The Small Business Administration (SBA)has announced the extension of the deadline for businesses to apply for the Economic Injury Disaster Loan (EIDL) program to December 31, 2021. The new deadline extension for the second round of EIDL funding comes after the second COVID-19 relief bill of $900 billion was signed into law on December 27th, 2020.
The extension of the deadline is expected to assist small businesses access loans affected by disaster including flooding, wildfires and COVID-19. The EIDL Grant program was part of a new provision in the March 2020, $2.2 trillion COVID-19 relief bill. Under that bill, small businesses were eligible to receive up to $10,000 in emergency funds.
Through EIDL some $197 billion is available for working capital funds to small businesses, non-profits, and agricultural businesses in low-interest loans.
Key Provisions of EIDL
- As part of the EIDL an advance of up to $10,000 is available for those who apply for the EIDL. Small businesses will get $1,000 per employee and it is available for up to 10 employees or $10,000.
- Loans come with a 3.75% interest rate for small businesses. It includes 30-year maturity and an automatic deferment of one year before monthly payments begin.
- Since the declaration of the COVID-19 Pandemic, the SBA has approved over 3.6 million loans through the EIDL program.
- Businesses can use the loan for working capital and operating expenses. This includes the continuation of health care benefits, rent, utilities, and fixed debt payments.
- To be eligible for the loan businesses should provide collateral for over $25,000. Collateral can be machinery and equipment, furniture and fixtures, and others.
COVID-19 Relief for Small Business
The extension of EIDL will help businesses navigate through the uncertain economic waters the world is facing now. With it, businesses can use the loan for paying payroll, rent, mortgage, vehicle leases, and other bills they would have been able to pay if not for the COVID-19 pandemic.
Prior to the CARES Act’s enactment, the SBA had about $1.1 billion in disaster loan credit subsidy available. This was to support about $7 billion to $8 billion in disaster loans. The SBA has announced payments on new EIDL loans would be deferred for one year with interest being accrued.