- U.S. Small Business Administration increases the Economic Injury Disaster Loan lending cap to $500,000 and economic injury period to 24 months
- Decision follows calls to expand limits as COVID-19 pandemic persists longer than anticipated
- SBA previous extended the deferment period for disaster loans until 2022
Summary by Dirk Langeveld
The U.S. Small Business Administration has more than tripled the lending limit for its COVID-19 Economic Injury Disaster Loan program and quadrupled the economic injury period for these loans.
Starting the week of April 6, the lending limit for COVID-19 EIDL loans will be raised from $150,000 to $500,000. The economic injury period will increase from six months to 24 months.
SBA Administrator Isabella Casillas Guzman said there have been calls to expand the program’s offerings as the COVID-19 pandemic has persisted longer than anticipated. Any businesses that have current EIDL loans at the $150,000 cap will be contacted by e-mail closer to the implementation date with more details on how to request an increase in funding.
The EIDL program was established before the pandemic as a way to assist businesses that suffer temporary economic losses due to hurricanes and other disasters. The loans have a 30-year term and are available at a 3.75 percent interest rate for small businesses and 2.75 percent interest rate for nonprofits. Eligibility was extended to all small businesses, nonprofits, and agricultural businesses during the pandemic.
More than 3.7 million businesses employing over 20 million people have been assisted through the COVID-19 EIDL program. Lending surpassed $200 billion in February.
The increase in the lending cap comes shortly after the SBA announced that it is extending the deferment period for all disaster loans, including COVID-19 EIDL loans, until 2022. The first payment due date for all disaster loans made in 2020 is extended to 24 months from the date of the note, and the first payment due date for disaster loans made in 2021 is extended to 18 months from the date of the note.
Interest will continue to accrue on the outstanding balance of deferred loans, but borrowers can choose to make full or partial payments during the deferment period.
