COVID EIDL Enhancements

FLB Law      Oct. 1, 2021

The U.S. Small Business Administration (SBA) recently announced enhancements to its COVID-19 Economic Injury Disaster Loan (EIDL) program, which is intended to provide critical access to capital for the industries hardest hit by COVID-19. The enhancements of the COVID-19 EIDL available to small businesses became immediately effective on September 8, 2021, and will run through December 31, 2021, or until funds run out. According to the SBA, it is ready to receive new applications immediately from small businesses looking to take advance of the new COVID-19 EIDL enhancements.

A COVID-19 EIDL is a low-interest, fixed-rate loan with a term of up to thirty (30) years. The fixed interest rate is 3.75% for small, for-profit businesses and 2.75% for nonprofit organizations. To be eligible for the loan, an otherwise qualifying business must be able to show that sustained a “substantial economic injury” that occurred as a result of COVID-19.

Key Enhancements Include

  • Increased COVID-19 EIDL Cap: The SBA lifted the COVID-19 EIDL cap from $500,000 to $2 million. These loans can be used by the receiving business to cover any normal operating expenses and working capital, including payroll, equipment purchasing and debt payment.
  • Expansion of Eligible Use of Funds: The eligible use of the funds was expanded to include prepayment of commercial debt and payments on federal business debt.
  • Implementation of a Deferred Payment Period: Small business owners that receive this loan do not have to begin repayment until two (2) years after loan origination.
  • Exclusivity Window: Through October 8, 2021, SBA approvals and disbursements will focus solely on loan requests up to $500,000. Approval and disbursement of loans over $500,000 will begin after this exclusivity window.
  • Simplified Affiliation Requirements: The SBA established more simplified affiliation requirements (modeling those of the Restaurant Revitalization Fund) to ease the COVID-19 EIDL application process for small businesses.

In addition to these enhancements, the SBA indicated that it has optimized processes and increased capacity to improve the customer experience for applicants. As a result of increased loan review rates, the SBA advised that the loan increase backlog has been cleared, and new applications can be processed immediately. To ensure that COVID-19 EIDL funding is getting to the businesses that need it the most, the SBA also advised that it increased fraud controls and is working in collaboration with the SBA Inspector General to monitor the program closely.

It is also important to note that businesses that previously received loans through the Paycheck Protection Program (PPP), Restaurant Revitalization Fund, or Shuttered Venue Operators Grant may still be able to benefit from a COVID-19 EIDL.

Applications must be received by December 31, 2021, or before funds run out, so interested borrowers are advised to apply as soon as possible. We continue to monitor the ever-changing situation. If you would like assistance in assessing your eligibility for this loan or assistance in applying, our attorney team is here to help. Don’t hesitate to get in touch with us using the form below, or give us a call at 610-797-9000. We wish you well during these extraordinary times.


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