On September 9, 2021, Small Business Administration (SBA) Administrator Isabella Casillas Guzman announced significant enhancements to the existing COVID Economic Injury Disaster Loan (EIDL) program. Administrator Guzman identified the following changes which are intended to ease the application process and increase small business’s access to working capital:
- Increase the current cap on EIDL loans from $500,000 to $2 Million.
- Simplifies affiliation requirements to make the application process more accessible for small businesses by standardizing affiliation requirements with those used by the Restaurant Revitalization Fund (RRF) application process.
- Establishes a 30 day “Exclusivity Window,” prioritizing main street business access to funds. This window gives priority to processing and disbursing EIDL loans of up to $500,000. The approval and disbursement of loans greater than $500,000 will commence after the expiration of the Exclusivity Window; and
- Implements Deferred Payment Period, ensuring that small business owners will have two years from the date of loan origination before they must begin repayment of EIDL funds.
The new rule also permits the use of loan proceeds to make debt payments, including pre-payments, which was not previously allowed. Loan proceeds may still be used to pay operating expenses as well. The rule also relaxes the 500-employee limit, allowing businesses with more than 500 employees, but with no more than 500 employees at a single location to qualify, provided that the business does not have more than 20 total locations.
The COVID-19 EIDL program provides a 30-year repayment term with a fixed interest rate of 3.75% for businesses and 2.75% for non-profits.
Prior applicants, including those in the restaurant and food-service industries, can seek to increase prior grants of assistance. The last day for applications to be received is December 31, 2021.
Matthew Rak is a Partner with Leech Tishman and leads the Business Succession Group and the Nonprofits & Tax-Exempt Organizations Group. He is based in the Pittsburgh office and can be reached at 412.261.1600 or firstname.lastname@example.org.
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Leech Tishman Fuscaldo & Lampl is a full-service law firm dedicated to assisting individuals, businesses, and institutions. Leech Tishman offers legal services in business restructuring & insolvency, corporate matters, employment & labor, estates & trusts, intellectual property, litigation & alternative dispute resolution, and real estate. In addition, the firm offers a wide range of legal services to clients in the aviation & aerospace, cannabis, construction, energy & natural resources, healthcare, and hospitality industries. Headquartered in Pittsburgh, PA, Leech Tishman also has offices in Chicago, Los Angeles, New York, Philadelphia, Sarasota, Washington, D.C. and Wilmington, DE.