The Small Business Administration (SBA)announced the extension of the deadline for companies to apply for the Economic Disaster Lending (EIDL) program to December 31, 2021. The further extension of the deadline for the second round of EIDL funding Comes after the second $ 900 billion COVID-19 relief bill was enacted on December 27, 2020.
SBA Extends EIDL Loan Application Deadline
Extension of deadline should help small businesses access loans affected by disaster including floods, forest fires and COVID-19. The EIDL grant program was part of a new March 2020 provision, $ 2.2 trillion COVID-19 Relief Bill. Under this bill, small businesses could receive up to $ 10,000 in emergency funds.
Through EIDL, some $ 197 billion is available for working capital for small businesses, nonprofits, and farm businesses in the form of low-interest loans.
Key provisions
- Under the EIDL, an advance of up to $ 10,000 is available for those applying for the EIDL. Small businesses will receive $ 1,000 per employee and it is available for up to 10 employees or $ 10,000.
- The loans carry an interest rate of 3.75% for small businesses. It includes a 30-year maturity and an automatic deferral of one year before the start of monthly payments.
- Since the COVID-19 pandemic was declared, the SBA has approved more than 3.6 million loans through the EIDL program.
- Businesses can use the loan for working capital and operating expenses. This includes maintaining health care benefits, rent, utilities, and fixed debt payments.
- To be eligible for the loan, businesses must provide collateral of more than $ 25,000. Guarantees can be machinery and equipment, furniture and accessories, etc.
COVID-19 relief for small businesses
The expansion of EIDL will help businesses navigate the uncertain economic waters the world currently faces. With that, businesses can use the loan to pay salaries, rent, mortgage, vehicle rentals, and other bills they could have paid without the COVID-19 pandemic.
Prior to the enactment of the CARES Act, the SBA had approximately $ 1.1 billion in disaster loan grants. This was to fund about $ 7 billion to $ 8 billion in disaster loans. The The SBA announced that payments on the new EIDL loans will be deferred for one year with interest accruing.
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