The US Small Business Administration (the “SBA”) has made significant changes to the rules and regulations of the COVID Economic Injury Disaster Loan program (the “EIDL”). The SBA issued an Interim Final Rule, effective September 8, 2021, that, among other things:
- Increases the maximum loan amount for the EIDL to $2,000,000.00 (the previous maximum was $500,000); and
- Broadens the use of loaned funds. Prior to the Interim Final Rule, EIDL loaned funds could only be used for working capital necessary to carry the business until resumption of normal operations and for expenditures necessary to alleviate the specific economic injury. A loan recipient could not use the loaned funds to pay Federal debt or prepayment non-Federal existing debt. Now, a loan recipient can use the loaned funds for payments on all forms of business debt, including loans owned by a Federal agency (including SBA) or a Small Business Investment Company (SBIC) licensed under the Small Business Investment Act. Further, the loaned funds may be used to make debt payments including monthly payments, deferred interest, and pre-payment of business debt, except that pre-payments will not be permitted on any debt owned by a Federal agency (including SBA) or an SBIC. COVID EIDL loan proceeds may be used to pay debt incurred both before and after submitting the COVID EIDL loan application.
It is important to act fast when it comes to the EIDL as there are a limited amount of funds available. The Interim Final Rule can be found here: https://www.govinfo.gov/content/pkg/FR-2021-09-08/pdf/2021-19232.pdf Please do not hesitate to reach out to Adam M. Stumpf (as@chehardy.com) with additional questions.