Eidl Loan Increase: the Small Business Owners Guide
Economic Injury Disaster Loans are federal government loans to help struggling small businesses recuperate and stay afloat during the COVID-19 crisis. The loans are very borrower-friendly and are administered through several programs created by the government. By September of 2021, the United States small business administration announced that there will be an increase in Eidl loans and increased flexibility for usage. This is to help the current situation of circumstances and challenges presented.
The loan program update includes the following:
- maximum loan cap can now reach $2 million.
- Borrowers can use funds to pay for payment or prepayment of commercial business debt.
- Funds can be used to pay for federal debts.
- The first payment for the loans has been extended to 24 months from the initial 18months.
Majority of the changes became effective on September 8, 2021, but candidates petitioning for more than $500,000 had to wait until October 8, 2021, for the SBA to begin approving. Like all new things, guidelines can be subject to change, so keep informed.
EIDL Loan Terms
EIDL is a loan meaning the beneficiary will be indebted to the federal government until the full amount of the loan plus interest is paid. Before applying for a loan, first a refresher of loan terms.
- Personal Guaranty: the personal guarantee is required for loans that exceed $200,000
- Prepayment guarantee: none
- Interest rate: 3.75% fixed for businesses; 2.75% fixed for private nonprofit organizations
- Collateral: Collateral is required for loans that exceed $25,000
- Loan terms: 30 years
- Payment deferment: Automatically deferred for 24 months with interest accruing during the deferment period
- You can find out more about the EIDL Loan Terms as new specifications can become updated time to time.
Who Should Apply for a Loan or Loan Increase?
Small businesses struggling to keep their heads above water due to the expenses incurred but the pandemic are eligible to benefit from this loan program and you should consider applying. The program is advantageous because it provides loans that are quite friendly and can go a long way to bolster businesses through low-interest long-term loans.
There are other eligibility criteria for businesses to qualify for the program. The business applying for the loan must have been affected by the pandemic and should have at least 500 employees on its payroll.
In addition, your business must be physically situated in the United States and have endured working capital losses because of the COVID-19 pandemic. The business must also have been functional on or before January 31, 2020.
The business should have a legal IRS-issued Taxpayer Identification Number (TIN). Owners, partners, or members that possess more than 20 percent of the company must be United States citizens, qualified aliens having a social security number, or non-citizen nationals.
How To Apply for an EIDL Loan Increase
Applying for a long increase can be easy and stress-free both for new applicants as well as those with existing loans. Those with current applications should petition for a loan increase rather than creating another application. Ensure that you submit one loan application per business. To apply for a loan increase do the following:
- First, log in to your SBA portal account (do not generate a new account, new accounts are for first-time applicants).
- In the Status section of your dashboard, choose the Request More Funds option.
- Answer the questions that will appear in the portal.
- Submit any required documents.
- Enter your loan increase request amount.
- Make sure you submit the increase request amount otherwise it may not fully go through.
Each business can only have one account. Only create a new account if it is your first time applying for an Eidl loan. If you are requesting a loan increase then simply log into your existing SBA portal account. We hope the information contained in this article helps you secure an Eidl loan increase and get your business back on its feet.
