The U.S. Small Business Administration Sept. 9 announced a major overhaul of the COVID Economic Injury Disaster Loan program, including a 300% increase in the maximum loan size.
Beginning Oct. 8, 2021, small businesses can borrow up to $2 million through the EIDL program, designed to help employers struggling to navigate pandemic-related disruptions meet financial obligations and operating expenses.
The agency will defer repayments for 24 months for the 30-year loans, available at 3.75% interest for small businesses and 2.75% for private nonprofit organizations.
Prepaying commercial debt and federal business debt repayments will be added to the approved use of loan funds, in addition to the existing uses, including normal operating expenses and working capital, payroll, and purchasing equipment.
The SBA will implement a 30-day exclusivity window for approving and disbursing loans of $500,000 or less.
Approval and disbursement of loans over $500,000 will begin Oct. 8, although businesses can apply for the larger loans now.
Agency officials said the changes allow businesses greater flexibility and support from the $150 billion in available COVID EIDL funds.
The SBA cited a Goldman Sachs small business survey, released this month, showing that 44% of business owners have less than three months of cash reserves, with just 31% confident in their ability to access capital.
That survey also shows that the pandemic continues to disproportionately impact Black-owned firms, with more than half (51%) reporting less than three months of cash reserves.
“Eighteen months of COVID-related economic headwinds have battered America’s small businesses," said Goldman Sachs' survey director Joe Wall.
"While many storefronts are reopening, small business owners from across the country are sending a clear message that they need more relief in order to continue on their road to recovery."
The SBA says it has expanded outreach efforts to underserved communities, where businesses may also be eligible for up to $15,000 in EIDL Targeted Advance and Supplemental Advance grants.
The EIDL overhaul follows the agency's Aug. 4 launch of a streamlined Paycheck Protection Program loan forgiveness process for businesses with loans of $150,000 or less.
The agency says over 820,000 small businesses have since applied for forgiveness through the new process, with another 2.5 million firms expected to follow.