Key Updates Regarding the Expansion of COVID-19 Economic Injury Disaster Loans (EIDL)

The Small Business Association (SBA) has issued various updates related to the amount of disaster loans available to address the ongoing strife faced by many businesses in the wake of the COVID-19 pandemic, including the potential to request an increase to an existing loan.

The loan limit for COVID-19 Economic Injury Disaster Loans (EIDL) has been increased 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 as of the week of April 6, 2021.

For loan amounts over $25,000, the SBA will continue to take a security interest in business assets evidenced by a general security agreement and UCC filing. SBA will also require an unsecured personal guarantee for loan amounts over $200,000 from any individual with 20% or more ownership. Real estate collateral will not be required for any loans of $500,000 or less.

Loans for less than $500,000 that were approved prior to April 7, 2021 are likely eligible for an increase based on the new loan maximum amounts. Businesses that received a loan subject to the previous loan limit can now submit a request for an increase. 

The SBA is reaching out directly to EIDL borrowers via email to provide more details about how they can request an increase. Borrowers should expect to receive emails from @sba.gov or @updates.sba.gov.

Companies that wish to request a loan increase may also contact the SBA as follows:

• Send an email to [email protected].
• Use the subject line “EIDL Increase Request for [insert your 10-digit application number]”.
• Include in the body of your email identifying information for your current loan including application number, loan number, business name, business address, business owner name(s) and phone number.
• Do not include any financial documents or tax records with your initial request. SBA will send a follow up email notification if it needs additional documents.

Due to the high volume of incoming requests, the SBA estimates that it may be several weeks before a borrower receives a response from the agency on the next steps to follow. So as not to slow down the overall response time, those who request a loan increase should not resend multiple requests if they do not hear back right away from the SBA.

In addition, the SBA also extended the due dates of payments under all SBA disaster loans made in 2020 from 12 months to 24 months from the date of the note.  For disaster loans made in 2021, the due date is now 18 months from the date of the note instead of the original 12 months.

The SBA also granted a third deferral extension, an additional 12-month deferment of principal and interest payments, for existing disaster loans approved prior to 2020 that were in regular servicing status as of March 1, 2020. The SBA granted an automatic deferral of principal and interest payments through Dec. 31, 2020, and then extended the deferral period through March 31, 2021. The latest deferral allows borrowers to wait until the payment immediately preceding March 31, 2022 to resume their regular payment schedule.

Borrowers may voluntarily continue to make payments during the deferment, as interest will continue to accrue on the outstanding loan balance during this period.

Greg Wank, Anthony Bracco and David Beckman continue to monitor ongoing updates to economic disaster relief programs. To better understand how the changes impact your unique situation, please contact them or your Anchin Relationship Partner, or our Anchin COVID-19 Resource Team at [email protected].