The Small Business Administration (SBA) has recently announced additional support to small businesses through the strengthening of the COVID-19 Economic Injury Disaster Loan (EIDL) program and a more streamlined Paycheck Protection Program (PPP) Loan Forgiveness process.
COVID-19 Economic Injury Disaster Loan (EIDL) Program
The COVID-19 EIDL program was initially designed to serve and support small businesses affected by the pandemic. Recently, changes were made to help strengthen the program so that it could do better to support these small businesses:
- The COVID-19 EIDL cap has been increased from $500,000 to $2 million. These funds can be used for certain operating expenses and working capital, including payroll and more. The SBA will start processing loans greater than $500,000 beginning on October 8, 2021.
- A Deferred Payment Period has been implemented, in which the SBA will ensure that small business owners will not have to begin COVID-19 EIDL repayment until two years after loan origination. However, interest will accrue during this time period.
- The SBA has also established a 30-Day exclusivity window where they will approve and disburse funds for loans of $500,000 or less. Approval and disbursements of loans over $500,000 will begin after the 30-day period.
- The affiliation requirements have been simplified to ease the COVID-19 EIDL application for small businesses.
Applications will be received until December 31, 2021; however, the program may end sooner if funds are exhausted. Visit the SBA COVID-19 EIDL website to learn more about eligibility and application requirements.
PPP Loan Forgiveness Process
On August 4, the SBA launched the PPP Direct Borrower Forgiveness Portal that allowed borrowers with loans that totaled to or to less than $150,000 from participating lenders to apply for forgiveness directly through the SBA. This new change will help rush relief to over 6.5 million of the smallest small businesses.
This change gives small businesses a streamlined and user-friendly way to apply for forgiveness and receive relief. Since the launch of the PPP Direct Borrower Forgiveness Portal, the SBA has received more than 340,000 submissions from borrowers, which has put them on pace to close out forgiveness for the 3.4 million direct forgiveness borrowers by the end of the year.
Through this simpler process, the SBA proactively reaches out to borrowers and provides a pre-populated forgiveness form to the borrower that they can complete in the new direct forgiveness portal from a computer or smartphone. On average, users can submit their applications and receive their forgiveness decisions within a week.
Lenders are required to opt-in to this program here.
Learn More and Connect with an Advisor
Warren Averett will continue to keep you informed as information is made available. If you have questions about how these provisions impact your business, please reach out to your Warren Averett advisor, or have a member of our team reach out to you