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Starting today, April 6th, 2021, the Small Business Administration (SBA) will increase loan limits for its Economic Injury Disaster Loan (EIDL) Program. According to a press release from the SBA regarding the change, SBA Administrator Isabella Casillas Guzman explains that, “more than 3.7 million businesses employing more than 20 million people have found financial relief through SBA’s Economic Injury Disaster Loans, which provide low-interest emergency working capital to help save their businesses. However, the pandemic has lasted longer than expected, and they need larger loans. Many have called on SBA to remove the $150,000 cap. We are here to help our small businesses and that is why I’m proud to more than triple the amount of funding they can access.”
What is the New EIDL Lending Limit?
Previously, the maximum amount that small businesses and nonprofits could apply for was 6 months of working capital with a maximum loan amount of $150,000. With the new lending limit increase, that amount is now up to 24 months of working capital with a maximum loan amount of $500,000.
Are the Terms Still the Same for the EIDL Program?
The terms of the EIDL program have not changed. They are still 3.75% APR (fixed) for businesses and 2.75% APR (fixed) for nonprofits. Businesses have up to 30 years to repay the loan and there are no prepayment penalties or fees.
What Should I Do if I Want to Request a Higher EIDL Limit?
The SBA states that, “Businesses that receive a loan subject to the current limits do not need to submit a request for an increase at this time. 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. Any new loan applications and any loans in process when the new loan limits are implemented will automatically be considered for loans covering 24 months of economic injury up to a maximum of $500,000.”
When Do I Have to Pay My EIDL Back?
Last month, the SBA announced that they will be extending deferment periods for EIDLs until 2022. This was done in an effort to allow struggling businesses more time to recover from hardships caused by COVID-19.
Is Collateral Required for an EIDL?
Collateral is only required for loans over $25,000.
How Can I Use the Funds from My EIDL?
EIDL funds are to be used as working capital for normal operating expenses such as rent, utilities, inventory, office supplies, payroll, and more.
Can I Apply for Both the PPP and EIDL?
Yes, you can apply for both the PPP and the EIDL, but you are not allowed to double dip. This means that you cannot use funds received for the same purpose.
Still Have Questions?
We’ve got answers! Our COVID-19 Resource Center has up-to-date information and helpful tips for business owners like this PPP vs EIDL side-by-side comparison. To see if you qualify for the PPP and EIDL under these new guidelines, contact us at (844) 284-2725 or click below.
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