- COVID Economic Injury Disaster Loan program to expire on Dec. 31
- U.S. Small Business Administration will continue to process applications for loans as well as Targeted EIDL Advance grants after the deadline
- The expiration marks the close of the SBA’s COVID-19 emergency financing programs
Summary by Dirk Langeveld
The last COVID-19 emergency financing program available through the U.S. Small Business Administration is set to close at the end of this week.
The COVID Economic Injury Disaster Loan program will accept applications for loans as well as the associated Targeted EIDL Advance through Dec. 31. No new applications will be accepted after this date, though the SBA will continue to process applications after this date, including requests for reconsideration.
While the EIDL program is typically available to help businesses suffering revenue shortfalls due to a disaster, the COVID EIDL program was established and made available nationwide in response to the COVID-19 pandemic. Loans made through the program can be used for regular business expenses as well as business debt incurred at any time.
COVID EIDL loans are capped at $2 million and include a 30-year term, with a 3.75 percent interest rate for businesses and 2.75 percent interest rate for nonprofits. Borrowers have the option of deferring payment for two years and making regular payments for the remainder of the 28-year term, with no prepayment penalties. Collateral is required for loans above $25,000 and a personal guaranty is required for loans greater than $200,000.
The COVID EIDL lending cap was increased from $150,000 to $500,000 in March, and to $2 million in September. Borrowers who previously qualified for a smaller loan can request an increase to their maximum eligible loan amount for up to two years after their loan origination date or until the program’s funding is exhausted, whichever comes first.
The SBA will review reconsideration and appeal requests on COVID EIDL applications as long as they are received within the appropriate timeframes: six months from the date of decline for reconsiderations and 30 days from the date of reconsideration decline for appeals. These reviews are also contingent on funding still being available in the program.
The Targeted EIDL Advance grants offer an additional $15,000 for businesses in low-income communities that have 300 or fewer employees and can demonstrate a revenue decline of more than 30 percent for any eight-week period beginning on March 2, 2020.
A Supplemental Targeted Advance provides an additional $5,000 to businesses with 10 or fewer employees that can demonstrate a revenue loss of at least 50 percent. However, the SBA previously recommended that applications for these funds be submitted no later than Dec. 10, since they won’t be accepted or processed after Dec. 31.
As of Dec. 16, 3.86 million COVID EIDL loans approved totaling $312.41 billion had been approved. The SBA also recorded 532,124 Targeted EIDL Advance grants totaling $4.64 billion and 429,554 Supplemental Targeted Advance grants totaling $2.15 billion.
