Nonprofit EIDL Loans Expand for Charities is Inside Charity’s overview of the SBA’s decision to expand support for nonprofits in economic distress. Last week the U.S. Small Business Administration tripled the maximum amount that nonprofits can borrow under the COVID-19 Economic Injury Disaster Loans (EIDL) program. The loan limit for COVID-19 EIDL loans will jump from six months of economic injury with a maximum loan amount of $150,000 to up to 24 months of economic injury with a maximum loan amount of $500,000.
“More than 3.7 million businesses employing more than 20 million people have found financial relief through SBA’s Economic Injury Disaster Loans, which provide low-interest emergency working capital to help save their businesses. However, the pandemic has lasted longer than expected, and they need larger loans. Many have called on SBA to remove the $150,000 cap. We are here to help our small businesses and that is why I’m proud to more than triple the amount of funding they can access.” said SBA Administrator Isabella Casillas Guzman.
“This is the first time in the history of SBA which started in 1953, that we’ve been able to offer loans for a pandemic,” Kathy Cook, SBA Public Affairs Specialist said. “I think initially no one could envision the corona virus would continue for this long. However, businesses are still suffering.”
The SBA has approved more than $200 billion in COVID-19 EIDL loans. The loans have a 30-year maturity with interest rates of 2.75% for not-for-profits.
Any COVID-19 EIDL loans in process when the new loan limits go into effect will automatically be considered for the new maximum limits, the SBA said. Existing COVID-19 EIDL borrowers will be able to request an increase beginning April 6. A spokesperson said the SBA will provide updated instructions on how to request a loan increase on SBA.gov and also will reach out directly via email to existing COVID-19 borrowers with loans approved prior to the increased loan limit taking effect.
The announcement of the higher loan limits came less than two weeks after the SBA announced March 12 that it was extending deferment periods for all its disaster loans, including the COVID-19 EIDL loans. Thanks to that decision, COVID-19 EIDL recipients won’t have to start making payments on their loans until 2022, though borrowers may voluntarily continue to make payments during the deferment as interest will continue to accrue on the outstanding loan balance.
Nonprofits that receive a loan subject to the current limits do not need to submit a request for an increase at this time. SBA will reach out directly via email and provide more details about how businesses can request an increase closer to the April 6 implementation date. Any new loan applications and any loans in process when the new loan limits are implemented will automatically be considered for loans covering 24 months of economic injury up to a maximum of $500,000.
This new relief builds on SBA’s previous March 12, 2021 announcement that the agency would extend deferment periods for all disaster loans, including COVID-19 EIDLs, until 2022 to offer more time for businesses to build back. In order to shift all EIDL payments to 2022, SBA will extend the first payment due date for disaster loans made in 2020 to 24-months from the date of the note and to 18-months from the date of the note for all loans made in the calendar year 2021.
Applicants are encouraged to apply online using the Electronic Loan Application (ELA) via SBA’s secure website at https://disasterloan.sba.gov/ela
EIDL Filing Requirements:
1. Electronic Loan Application (SBA Form 5)
2. Most recent 3 Years of Business Tax Return(s)
3. Schedule of Liabilities (SBA Form 2202)
4. Other information that may be requested:
a) Complete copy, including all schedules, of the most recent Federal income tax return for principals, general partners or managing member, and affiliates (see filing requirements for more information).
b) If the most recent Federal income tax return has not been filed, a year-end profit-and-loss statement and balance sheet for that tax year
c) A current year-to-date profit-and-loss statement
d) Additional Filing Requirements (SBA Form 1368) providing monthly sales figures.
Questions about SBA COVID-19 EIDL and disaster loan payments can be emailed to [email protected] or directed to SBA’s Customer Service Center at 1-800-659-2955 (1-800-877-8339 for the deaf and hard of hearing).
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