SBA to Triple Loan Amounts for COVID-Impacted Businesses
Whatever your opinion on the national debt and government spending, when your business is in need of funding for COVID-related events, it is nice to have a resource to keep things going. The Small Business Administration is a leading lending resource for small business, and current COVID initiatives are freeing up money you may be able to access.
Beginning April 6, as announced by the SBAi, small businesses and non-profits can apply for up to 24 months of funding relief. The maximum loan amount is now $500,000, increased from the previous limit of $150,000.
According to the SBA Administrator, Isabella Casillas Guzman: “More than 3.7 million businesses employing more than 20 million people have found financial relief through SBA’s Economic Injury 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.”
How to Apply
As a part of the EIDL, Emergency Injury Disaster Loan program, eligible businesses can apply for the funding. The program offers businesses 30-year fixed rate loans to provide capital for normal operating expenses and:
- Health-care benefits
- Fixed debt payments
These are not forgivable loans, differing from the EIDL Advance loans or money received from the PPP, Paycheck Protection Program. Through the end of the year, eligible businesses can apply for these loans, and they may be able to apply for additional funding after the end of the year.
For Those with Prior Loans
More good news is that those businesses that have already applied or received loans through the SBA program may be eligible to apply for an increase in their loan amount based on the new maximum amount.
If your business has applied for or received a loan, you do not need to take any action. The SBA will contact you via email as the April start date approaches with more information as to your eligibility and how to proceed in applying for more money. Those who have received previous loan funds have up to two years after the date of issuance to apply for additional funding.
The EIDL program has been popular. More than 3.75 million loans have been made for more than $200 billion through March 18, 2021. Nearly 80% of those loans are for less than $100,000.
SBA Loan Flexibility
The SBA loans can be used for a variety of business-related expenses including:
- Normal operating expenses
- Equipment purchases
- Real estate purchases
Because the loans are guaranteed by the SBA, lenders are able to be flexible in requirements, payment terms, and interest rates. Carefully planned, a long term SBA loan can be a tool to grow the business in addition to helping it through the COVID pandemic damages.
The takeaway here is that this can be an opportunity for a small business to take advantage of COVID-related relief initiatives to pull together funding for growth or expansion. Recover from pandemic issues and fund growth at the same time.