On December 31st, 2020, the Small Business Administration (SBA) made an announcement regarding their Economic Injury Disaster Loan (EIDL) program. According to the agency, they have extended the deadline to apply for the EIDL program to December 31st, 2021. The extension comes as a result of the enactment of the Consolidated Appropriations Act, 2021, (CAA) on December 27th, 2020. Previously, the SBA released updated guidance on the EIDL program in August 2020.
Overview of the EIDL
On March 6th, 2020, Congress signed into law the Coronavirus Preparedness and Response Supplemental Appropriations Act. The act declared the COVID-19 outbreak a disaster under the Small Business Act, as operated by the SBA. Therefore, the declaration allowed the SBA to create EIDLs for small businesses impacted by the pandemic.
Below are some the requirements of the EIDL program:
- Most small businesses are eligible to apply.
- The SBA does examine a business’s credit history and their ability to repay.
- Businesses must show economic injury due to the coronavirus.
- EIDLs come directly from SBA Disaster Assistance.
- There is no cost to apply.
- Any provided funds are only for working capital (i.e., to pay fixed debts, payroll, accounts payable). The funding is not for lost sales, lost profits, or for business expansion.
To date, the SBA has approved $197 billion in EIDLs to assist small businesses and non-profits during the coronavirus pandemic.
As mentioned above, employers can now submit EIDL loan applications through December 31st, 2021. The official end date of application acceptance, however, will depend on the availability of funding. The loans offered hold a 3.75% interest rate for small businesses and 2.75% interest rate for nonprofit organizations. Each loan contains a 30-year maturity date and an automatic deferment of one year before the commencement of monthly payments. The SBA encourages eligible small businesses and nonprofits to apply as soon as possible.