SBA Loans May Help Businesses Affected by COVID-19
Last week, the U.S. Small Business Administration made significant changes to the Economic Disaster Lending Program that helps small businesses affected by disasters, including COVID-19. The program has been a lifeline for many small businesses in need of access to working capital due to the impact of the COVID-19 pandemic on their cash flow and operations.
Small businesses (and nonprofits) can now apply for up to $ 2 million in EIDL funds instead of the SBA’s previous cap of $ 500,000 through their lending portal at www.sba.gov. You can apply for up to $ 2 million today, but loan funds over $ 500,000 won’t be approved until after October 8. Loan funds up to $ 500,000 can be granted immediately after online applications are processed.
The EIDL also now allows restructuring of existing commercial and federal debt, meaning you can repay outstanding loans or debts with EIDL funds, increasing flexibility for most small businesses. With terms of 3.75% for small businesses and 2.75% for nonprofits up to age 30, this can be an important tool in reducing the burden of debt at interest rates. higher. You can still use the funds for rent, utilities, payroll, and other previously authorized operational expenses.
The SBA application process is expected to take approximately three weeks for claims up to $ 500,000, six to nine weeks for claims over $ 500,000. Applications over $ 500,000 cannot be awarded until after October 8, as noted above.
If your business is still in need of additional working capital due to the impact of COVID-19, this can be another important tool provided by the SBA. There is currently no remission provision for EIDL, so it is loan funds, not grants. Make sure you fully understand the impact this has on your ongoing business operations before applying.
For more details on the EIDL program, please feel free to visit the website at https://bit.ly/3tBHMs5.
Steve Bryant is Executive Director of the Gayle & Bill Cook Center for Entrepreneurship at Ivy Tech Community College-Bloomington and Regional Director of the South Central Small Business Development Center.