Question of the Week
Another EIDL Deferment
Happy Friday, everyone!
This week, the Small Business Administration (SBA) sent out some surprising and welcome news regarding the COVID Economic Injury Disaster Loan (EIDL) program. Borrowers will now get 30 months’ deferment from inception on their approved COVID EIDL loans. The extended deferment period will provide additional flexibility to small business owners impacted by the pandemic, especially those in hard-hit sectors managing disruption with recent variants and recent supply chain and inflation challenges amid a growing economic recovery.
Since its inception, the COVID EIDL program, a federal disaster relief loan, has allocated more than $351 billion in relief aid to 3.9 million borrowers, including the smallest of small businesses from historically underserved, disadvantaged communities.
Key information regarding deferment:
- This deferment extension is effective for all COVID-EIDL Loans approved in 2020, 2021, and 2022. Loans now have a total deferment of 30 months from the date of the Note. Interest will continue to accrue on the loans during the deferment.
- Borrowers may make partial or full payments during the deferment period but are not required to. The SBA recommends using www.pay.gov.
- The SBA will not send monthly SBA Form 1201 payment notices; however, the SBA will send regular payment reminders via email.
- Existing COVID EIDL Borrowers can find account balances and payment due dates in the SBA Capital Access Financial System (CAFS) and learn how to set up an account in the CAFS system by logging in at Capital Access Financial System (sba.gov).
- Deferments may result in balloon payments. The deferment will not stop any established Preauthorized Debit (PAD) or recurring payments on the loan. COVID-EIDL Borrowers with an SBA established PAD must contact their SBA servicing center to stop recurring payments during the extended deferment period. COVID-EIDL Borrowers who have established a PAD through Pay.Gov or any other bill pay service are responsible for terminating recurring payments during the extended deferment period.
- After the deferment period ends, COVID-EIDL Borrowers will be required to make regular principal and interest payments beginning 30 months from the date of the Note.
In September 2021, Administrator Guzman announced major enhancements to the COVID Economic Injury Disaster Loan (EIDL) program. Key changes announced included:
- Increased COVID EIDL Cap. The SBA lifted the COVID EIDL cap from $500,000 to $2 million. Loan funds can be used for normal operating expenses and working capital, including payroll, purchasing equipment, and paying off debt.
- Implementation of a Deferred Payment Period. The SBA ensured small business owners did not have to begin COVID EIDL repayment until two years after loan origination so that they could continue operating during the pandemic without having to worry about making ends meet.
- Establishment of a 30-Day Exclusivity Window. To ensure Main Street businesses have additional time to access these funds, the SBA implemented a 30-day exclusivity window of approving and disbursing funds for loans of $500,000 or less. Approval and disbursement of loans over $500,000 began after the 30-day period ended.
- Expansion of Eligible Use of Funds. The SBA allowed COVID EIDL funds to be used to prepay commercial debt and make payments on federal business debt.
- Simplification of affiliation requirements. To ease the COVID EIDL application process for small businesses, the SBA established simplified affiliation requirements to model those of the Restaurant Revitalization Fund (RRF).
Quote of the Week
“This extended principal and interest deferment will provide financial relief to millions of small business owners – particularly those hardest-hit by the pandemic and related marketplace challenges – so they can continue to pivot, adapt, and grow.” – said SBA Administrator Guzman
Task of the Week
If you haven’t checked on your EIDL, take some time this weekend to follow up.
You can access and review your Borrower account history in the SBA Capital Access Financial System (CAFS).
Immediately download your original loan documents from the RAPID Portal for your records.
If you have any additional questions, please feel free to call the Disaster Customer Service team at 833-853-5638 or email firstname.lastname@example.org.