SBA Increases Lending Limit for EIDL Program to $500,000
In a press release published on March 24, the Small Business Administration announced that it is increasing the lending limit for the Economic Injury and Disaster Loans program. Starting April 6, small businesses that have taken out a six-month loan for up to $150,000 will be able to extend the loan to up to 24 months and $500,000.
According to the SBA, 3.7 million businesses employing more than 20 million people have received support through the EIDL program. Due to the pandemic lasting longer than expected and increased calls from small businesses for the SBA to remove the $150K cap, the agency decided to more than triple the maximum loan amount.
Businesses that are already receiving a loan subject to the old limits do not need to apply for an increase. Instead, the SBA will contact them directly via email, detailing the process for a loan amount increase. Once the new limits are in effect, all new loan applications will automatically be considered for the increased loan limit.
This decision comes after the SBA’s announcement that from March 12, it would extend deferment periods for all disaster loans, including the EIDL, to 2022. In an effort to shift all payments to this year, the first payment due for loans starting in 2020 will be pushed back to 24 months after the date on the note and 18 months after the date of the note for loans beginning in 2021.
It seems that the federal government is doubling down on its efforts to prop up the ailing economy. Previously, the deadline for PPP loans was extended by two months, following much-needed revisions to the program aimed at helping businesses owned by women and minorities. Additionally, the IRS has made EIDL advances and forgiven funds non-taxable, providing additional financial respite to small businesses.