SBA Loan Opportunities
As U.S. businesses continue to recover from COVID-19’s economic devastation, the U.S. Small Business Administration (SBA) is expanding loan opportunities. The agency announced that beginning the week of April 6th, nonprofits and small businesses will be able to borrow up to $500,000 for up to 24 months. This expansion of the COVID-19 Economic Injury Disaster Loan (EIDL) program more than triples the existing limit of six months and a maximum loan amount of $150,000.
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In a news release announcing the change, SBA Administrator Isabella Casillas Guzman said,
“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.”
SBA Loan Application Online
Businesses that had already applied for a COVID-19 EIDL loan need not worry about reapplying, as all applications in process will automatically be considered for the increased amounts. Similarly, instructions will be published to allow those who have already been approved for a loan to apply for the expanded amounts. A loan increase can be requested via SBA.gov, and an email will go out to all previously approved borrowers containing the same information.
See this related post from Dennis Harabin: The Important Steps in Taking Control of Your Finances in 2022 and Beyond
According to one recent study, a general lack of financial education costs Americans a collective $415 billion every single year. Not only is the average amount of credit card debt that someone carries over $6,000 according to the same source, but roughly 40% of people report having less than $300 in their savings accounts. This issue has only been exacerbated by the COVID-19 pandemic, where people have needed to draw from whatever money they have saved up to make ends meet.
The COVID-19 EIDL program has been extremely successful, with over $200 billion in loans already approved by the SBA. Small businesses, including independent contractors and sole proprietors, have been provided 30-year maturity loans at a 3.75% interest rate, while not-for-profits will pay 2.75% in interest.
In more good news for borrowers, on March 12th the SBA announced that borrowers for all disaster loans, including the COVID-19 EIDL loans, would be provided extended deferment periods. Interest will still accrue on all outstanding loan balances, so though payments are not required until 2022, borrowers do have an incentive to begin paying their balance off sooner.
If you have any questions about the SBA EIDL loan limit expansion and how it could affect your business, please give us a call at 551-249-1040.
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