- U.S. Small Business Administration increases borrowing limit for COVID EIDL loans from $500,000 to $2 million
- Other changes also announced, including the ability to use COVID EIDL funds to prepay commercial debt or make payments on federal debt
- A 30-day exclusivity window will give priority to loans that fall under the previous $500,000 cap
Summary by Dirk Langeveld
In response to business requests for a greater borrowing limit, the U.S. Small Business Administration has increased the cap for loans under its COVID Economic Injury Disaster Loan program to $2 million.
SBA Administrator Isabella Casillas Guzman announced the change as well as other modifications to the program. The announcement was made shortly before the publication of an interim final rule indicating that certain hard-hit industries can now qualify for COVID EIDL loans if they have fewer than 500 employees per physical location, not just fewer than 500 employees in total.
The other major changes announced by Guzman include:
- A 24-month deferral period during which borrowers are not required to begin repayment of COVID EIDL loans
- The ability to use COVID EIDL funds to prepay commercial debt or make payments on federal debt
- Simpler affiliation rules in line with those created for the Restaurant Revitalization Fund
- A 30-day exclusivity period for the approval of loans of $500,000 or less
The COVID EIDL program is an offshoot of a disaster relief program that predates the COVID-19 pandemic. It allows all small businesses that suffered revenue losses due to the pandemic to borrow funds for eligible costs such as normal operating expenses and working capital. The loans were originally capped at $150,000, but this limit was later increased to $500,000.
Guzman said approximately $130 billion in COVID EIDL funds are still available. The program will expire on Dec. 31, or earlier if funding is depleted before that point.
Guzman said the SBA will also be ramping up its outreach efforts to the nation’s smallest businesses as well as those in low-income communities who may be eligible for supplemental COVID EIDL programs offering grants of up to $15,000.