Newburg | CPA Tax Brief (9/10/21)

Press Release Number 21-81 issued by the Small Business Administration (SBA) on September 9, 2021 announced updates to the Economic Injury Disaster Loan (EIDL) Program. The Program has been expanded to add more funds in response to challenges from the COVID-19 Delta Variant.

We have included below some of the key highlights from this press release. You can view the entire press release here:

Increased EIDL Amounts and Utilizations:

  • The press release announced a 4x increase to the EIDL limit, from $500,000 to $2M
  • Loan proceeds may now also be used to prepay commercial debt and make payments on Federal business debt
  • Qualifying debt payments include debt incurred both before and after submitting the loan application.
  • This change lifts the prior restrictions of only using proceeds on working capital

Changes to Loan Application:

  • For the first 30 days, the SBA will be automatically approving and distributing funds for loan amounts of $500,000 to give Main Street businesses additional time to access the funds
  • The application has been simplified by establishing more simplified affiliation requirements like those of the RRF

Deferred Payment Period:

  • The SBA has established a deferred payment period of 2 years after loan origination, a change from the original period of 18 months
  • Interest will accrue during this time at the established fixed rate of 3.75% or 2.75% for not-for-profits
  • Payments of principal and interest are then made over the remaining 28 years

All changes announced in the press release are effective immediately. The last day that applications may be submitted are December 31, 2021, but the SBA recommends filing applications as soon as possible.

Here at Newburg CPA, we can help you navigate the complexities of the EIDL Program. We have a specialized COVID-19 Response Team that can work collaboratively with you to ensure that you are maximizing the opportunities the SBA is offering.

Please contact 781-884-4100 should you require assistance.