The Small Business Administration has increased the maximum borrowing limit on its Economic Injury Disaster Loan from $150,000 to $500,000 beginning April 6, and a federal bill that has passed the House and is in the Senate will give people until May 30 to apply for PPP funding.
EIDL
The EIDL loan program, administered through the SBA, predates COVID and was originally used to help businesses cover losses incurred during short-term disasters such as floods. During the pandemic, the loans still covered only up to six months of losses.
Beginning April 6, loans can cover losses over a two-year period and up to $500,000.
People are utilizing this for cash flow purposes and to pay off other loans, said Michael Bittel, the executive director of the Adirondack Regional Chamber of Commerce. A lot of business owners dipped into savings or took pay cuts during the pandemic, he said.
"It's welcome that they've increased the time and length of loan,” he said.
The EIDL loans are administered through the federal government and must be paid off, but the interest rates are low, and the terms often last decades to keep the payments small. The SBA says in a press release that they will reach out to businesses that have already gotten loans and make changes without requiring new applications. Repayment can be deferred until 2022, the press release says.
PPP
Business owners will have only until the end of this month to apply for Paycheck Protection Program grants, Bittel said, unless President Biden signs an updated version of the program that has already made its way through the House. Bittel said he has been tracking the bill, which is already in the Senate and is expected to be signed into law by President Joe Biden.
The bill would shift the application date from the end of March to the end of May.
This is significant to 501(c)6 nonprofit corporations, to individual contractors and to sole proprietors, Bittel said.
The program was not available to nonprofits until January, while contractors and sole proprietors could have applied earlier, but were required to apply using their net income as the basis for the amount of grant they could receive.
The new law will allow them to apply for help based on gross revenue. Small companies such as these often have much higher gross revenues than net profits, Bittel said.