The SBA recently announced an expansion to the Economic Injury Disaster Loan (EIDL) program for small businesses and not-for-profit organizations. Starting the week of April 6, organizations that received an EIDL that was capped at $150,000 will soon be notified that they may be eligible for an increase up to a total loan amount of $500,000.
What is changing with the EIDL program?
EIDL funding was designed to cover those organizations suffering COVID-19 related economic damage for six months. With new changes by the SBA, the program is now being extended to 24 months. This will potentially provide significant increases for many loan recipients as past financial information will still be used in determining qualification. It will also further defer payments out 18-24 months.
Should I increase my EIDL?
After the CARES Act was passed, some businesses applied to receive a substantial amount of EIDL funding early on because there was a great amount of uncertainty around future funding opportunities. This was a good opportunity for some businesses to keep their doors open, but the EIDL funding comes with some very restrictive loan covenants and terms on how the funding can be used. They are designed for disaster recovery, so if a company is back on solid footing, they may want to re-evaluate the opportunity before increasing the loan amount to make sure it fits long term.
How can I increase my EIDL?
According to the SBA, businesses that receive a loan subject to the current limits do not need to submit a request for an increase. The SBA will reach out directly via email and provide more details about how businesses can request an increase closer to the April 6 implementation date.
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