Many American business owners used government-sponsored grant and loan programs to stay afloat during COVID. Programs like the Paycheck Protection Program (PPP) and the COVID Economic Injury Disaster Loan (EIDL) program, both managed by the Small Business Administration (SBA), provided much-needed funds. Most COVID-relief programs have closed, but EIDL funds are still available.
Currently, the EIDL program holds more than $100 billion. But be aware that the program is currently slated to end on December 31, 2021, or when funds are depleted. Current loan recipients should log into the SBA portal to check their eligibility. People who qualify for additional money will see a button saying something like “Request an Increase.”
Recently, the SBA announced changes that should provide much-needed funds to a greater number of businesses.
Increasing the Cap
Previously, borrowers could only borrow up to $500,000. By lifting the COVID EIDL cap, companies can now obtain loans up to $2 million.
Extending the Deferred Payment Period
Another change gives business owners more time to begin repaying their loans. Borrowers now have up to two years after loan origination to start making their loan payments.
Implementing an Exclusivity Window
The SBA hopes to encourage smaller businesses to apply and receive approval more quickly. For 30 days, the SBA will only approve and disburse loan up to $500,000. Borrower applying for larger loans – up to $2 million – can do so at the conclusion of the 30-day window.
Expanding Eligible Use of the Funds
From the beginning of the program, business owners have been required to use EIDL funds for specific, business-related uses. With the new changes, borrowers are now allowed to use funds to pay off all forms of commercial and business-related debt. This includes debts owed to federal agencies and small business investment companies licensed under the Small Business Investment Act.
Simplifying Affiliation Requirements
When the Restaurant Revitalization Fund (RRF) program ran out of money, many restaurant-related businesses were left high and dry. The new EIDL changes should help.
Affiliation rules were an important part of the RRF fund. That’s because restaurants that operate in numerous locations might employ too many people to qualify for small business loans. Other small businesses faced the same hurdle.
The SBA has now adopted the RRF affiliation rules for use in the EIDL program. Affiliated businesses may now apply for EIDLs “as long as the eligible entity maintains an equity interest or right to profit distributions of no less than 50 percent.” This also applies to situations where an “eligible entity has the contractual authority to control the direction of the business, provided that such affiliation existed as of January 31, 2020.”
In Conclusion…
If your business is still suffering the lingering effects of COVID-19, check with the SBA to see if you are eligible for EIDL funds. Current borrowers may also find that additional funds are available and more useful than ever.
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website.
We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.