SBA triples maximum loan amount to $ 500,000 for businesses affected by COVID-19
The Small Business Association (SBA) announced that starting April 6, small businesses and nonprofits can apply for up to two years of relief with a maximum loan amount of $ 500,000.
The COVID-19 Economic Disaster Loan Program (EIDL) provides businesses with 30-year fixed-rate loans providing capital for rent, health benefits, utilities, and debt repayment. However, unlike the Paycheck Protection Program (PPP), these loans are non-repayable.
The EIDL program has been essential for small businesses and non-profit organizations. More than three million loans worth $ 200 billion have been approved through March 2021. According to CNBC, 80% of loans processed were for less than $ 100,000.
Small businesses and qualifying nonprofits can apply for the loans until the end of the year and can continue to apply for funds after the December 31 deadline. The maximum previous loan amount for EIDL was $ 150,000 for six months.
Certain loans that were or will be approved before April 6 may benefit from an increase according to the new amounts.
“More than 3.7 million businesses employing more than 20 million people have found financial assistance through SBA Economic 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. Many have called on the SBA to remove the $ 150,000 cap. We’re here to help our small businesses and that’s why I’m proud to more than triple the amount of funding they can access, ”SBA administrator Isabella Casillas Guzman said in a statement.
Businesses looking for an increase in loan amounts will not have to contact the SBA. Instead, the agency will contact businesses via email around the start date with information for those who wish to request a raise. Those who received funding under the old guidelines will have up to two years to apply for an increase.
The Senate is also considering extending the PPP program until May 31. The program is currently scheduled to end on March 31.