Your business could soon qualify for a $500K disaster loan
The EIDL program is set to cover two years of working capital expenses for businesses affected by COVID-19.
The Small Business Administration (SBA) announced Wednesday that it will increase the maximum Economic Injury Disaster Loan (EIDL) to $500,000. It also extended the amount of time the loan program covers from 6 to 24 months.
The EIDL is a federal disaster loan program that offers low-interest loans to businesses that have been impacted by COVID-19. Currently, you can receive up to $150,000 through the EIDL if your business has been financially impacted by the coronavirus outbreak or related shutdowns.
The new, higher loan amounts will be available starting on April 6th.
Here’s what it means for your small business.
Who can get a $500,000 EIDL
The amount you receive through the EIDL program depends on your business’s operating expenses. If your business’s working capital expenses over 24 months add up to $500,000, then you can qualify for the full amount. Otherwise, you’ll receive a smaller EIDL loan.
And your business must meet the EIDL eligibility requirements. If you’ve already received a disaster loan, you aren’t eligible to apply.
How to apply
You can apply by filling out an EIDL application on the SBA website at any time — you don’t have to wait until April 6th. You’ll have to answer a few questions to make sure your business is eligible before continuing to the rest of the application. When you’re done, write down your application number. You’ll need it to check on your application status with the SBA.
The SBA estimates that it takes about two hours to complete.
What if I just applied?
You likely don’t have to do anything if you just applied for an EIDL. Applications that are in process at the SBA on April 6th will automatically be considered for the new maximum loan amount.
What if I’ve already received an EIDL?
You also don’t need to do anything if you’ve received an EIDL — yet. Businesses that got an EIDL under the $150,000 loan cap should receive a phone call or email from the SBA with instructions on how to request a loan cap sometime before April 6th.
If you believe you’re eligible for a loan increase but don’t hear from the SBA before April 6th, call the SBA’s customer service center at 800-659-2955. Or send an email to DisasterCustomerService@sba.gov.
Other recent changes to COVID-19 disaster loans
There have been several changes to the EIDL program since its launch in March 2020, but the Biden Administration has made a couple of changes worth noting if you’re planning on applying for an EIDL soon.
The American Rescue Plan Act of 2021 relaunched the EIDL grant program. Small businesses will soon be able to apply for an advance of up to $5,000 that doesn’t need to be repaid — even if your application is denied.
This program will first roll out to businesses with fewer than 10 employees that saw at least a 50% drop in revenue since March 2020. It will then be available to all businesses with 10 or fewer employees before opening up to other eligible businesses. Grants are available until funds run out.
This announcement comes weeks after the SBA extended the deferment period on EIDLs until 2022. Businesses that took out a loan in 2020 now have 24 months of deferment before their first payment is due. Businesses that receive an EIDL in 2021 have 18 months.
Other federal assistance programs
The EIDL program is only one of several small business relief options available through the federal government.
Your business also has until May 1st to apply for a First or Second Draw loan through the Paycheck Protection Program (PPP).
And the SBA will cover payments on all new 7(a), 504 and SBA microloans through its COVID-19 debt relief program.
In some cases, the amount of relief you can qualify for is affected by the other types of loans and grants your business already received. Review all of your options before you apply to get the most out of federal coronavirus relief.