EIDL Archives - CironeFriedberg, LLP

On Friday, November 19, 2021, the U.S. Small Business Administration (SBA) released updated guidance regarding applications for loans, advances, and appeal requests with the COVID-19 Economic Injury Disaster Loans (EIDL) program.

While the December 31 deadline remains in place, the SBA strongly recommends that businesses seeking a Supplemental Targeted Advance submit their application no later than December 10, 2021. The agency cannot continue to process Supplemental Targeted Advance applications after December 31, which means that applications received close to that date might not complete the review process in time.

In contrast, EIDL and Targeted EIDL Advance applications received by December 31 will continue to be processed after that date until all funds are exhausted. The SBA will accept and review reconsideration and appeal requests received on or before December 31, provided that the reconsideration or appeal is received within six months from the date of decline for reconsiderations and 30 days from the date of reconsideration decline for appeals — provided funding is still available. The COVID-19 EIDL programs are designed to provide funding access to small businesses hurt economically during the COVID-19 pandemic:

COVID-19 EIDL loans have a 30-year term with fixed interest rates of 3.75% for small businesses, including sole proprietors and independent contractors, and 2.75% for not-for-profits. Loan payments are deferred for the first two years, though interest will accrue. Payments on interest and principal will then take place over the final 28 years of the loan. Loan proceeds can be used for any normal operating expenses and working capital, including payroll, purchasing equipment, and paying debt.
A Targeted EIDL Advance of up to $10,000 is available to businesses that are located in low-income communities, have 300 or fewer employees, and suffered a revenue loss of more than 30% due to COVID-19.
A Supplemental Targeted Advance is available to Targeted EIDL Advance recipients that have 10 or fewer employees and saw revenues drop at least 50% due to COVID-19. The cap on the advance is $5,000, meaning that businesses face a total cap of $15,000 if they receive both types of advance grants. Neither of the advance grants needs to be repaid.

The guidance issued by the SBA comes shortly after the agency announced major modifications to the EIDL program designed to make the money more accessible to more businesses. The most significant change was raising the cap on EIDL loans from $500,000 to $2 million.

If you need assistance or have any questions on the information in this article, please call your CironeFriedberg professional. You can reach us by phone at (203) 798-2721 (Bethel), (203) 366-5876 (Shelton), or (203) 359-1100 (Stamford) or email us at info@cironefriedberg.com.

On September 9, 2021, the Small Business Administration (SBA) announced major modifications to the COVID-19 Economic Injury Disaster Loans (EIDL) program, including raising the loan cap from $500,000 to $2 million and adding business debt payments to the list of ways businesses can use the loan proceeds. A new regulation was added limiting entities that are part of a single corporate group to receive a combined total of no more than $10 million in COVID-19 EIDL loans. For purposes of this limit, entities are part of a single corporate group if they are majority owned, directly or indirectly, by a common parent. The following key changes were announced. All are effective immediately:

Increasing the COVID-19 EIDL cap from $500,000 to $2 million: Loan funds can be used for any normal operating expenses and working capital, including payroll, rent/mortgage, utilities, purchasing equipment, and paying debt incurred at any time (past, present and future).
Implementation of a deferred payment period: The SBA will ensure small business owners will not have to begin COVID-19 EIDL repayments until two years after loan origination. Payments are deferred for the first two years (during which interest will accrue), and payments of principal and interest are made over the remaining 28 years. The agency previously had implemented an 18-month deferment period for loans made during 2021.
Establishment of a 30-day exclusivity window: To ensure Main Street businesses have additional time to access these funds, the SBA said it is implementing a 30-day exclusivity window of approving and disbursing funds for loans of $500,000 or less. Approval and disbursement of loans over $500,000 will begin after the 30-day period.
Expansion of eligible use of funds. COVID EIDL funds will now be eligible to prepay commercial debt and make payments on federal business debt.
Simplification of affiliation requirements: To ease the COVID-19 EIDL application process for small businesses, the SBA established more simplified affiliation requirements to mimic those of the $28.6 billion Restaurant Revitalization Fund.

A few other key points to the program have remained the same:

The COVID-19 EIDL program, which runs through December 31, offers 30-year loans with fixed interest rates of 3.75% for small businesses, including sole proprietors and independent contractors, and 2.75% for not-for-profits.
Collateral is required for all loans greater than $25,000.
Loans over $200,000 will require a personal guaranty.

SBA Clarifies COVID-19 EIDL Application Deadlines

SBA Quadruples Economic Injury Disaster Loan Cap to $2 Million

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