As businesses continue to deal with the financial implications of COVID-19, there are still lending options to aid them. The Small Business Administration (SBA) recently re-opened the Economic Injury Disaster Loan (EIDL) and EIDL Advance program portal to all eligible applicants experiencing economic impacts due to COVID-19. These are low-interest federal disaster loans for working capital which may be used to pay debts, payroll, accounts payable, and other bills that can’t be paid due to the disaster’s impact and that are not already covered by Paycheck Protection Program loans. The interest rate is 3.75% for small businesses and 2.75% for non-profits. Repayment terms may be set up to a maximum of 30 years and the first payment is deferred for one year. In addition, as part of the EIDL loan application, businesses may request an EIDL advance of up to $10,000. This is designed to provide emergency economic relief to businesses currently experiencing a temporary loss of revenue. This advance will not have to be repaid, and small businesses may receive an advance even if not approved for a loan. For more information, visit SBA.gov/Disaster. If you have received a PPP loan and an EIDL advance, the EIDL advance may be deducted from the amount of the PPP loan forgiveness.
A second option created to aid businesses dealing with the financial crisis due to the pandemic is the Main Street Lending Program. Developed by the Federal Reserve, these loans are for larger businesses with loan sizes ranging from $250,000-$300 million. The program offers 5-year loans, with floating rates, and principal payments deferred for 2 years and interest payments deferred for one year. Businesses must have 15,000 employers or fewer, or 2019 revenues of $5 billion or less. Loans will be applied for and approved by participating banks, whereas those banks will retain 5% of the loan amount and the Federal Reserve will purchase the remaining 95% interest in the loan. This program is expected to be operational soon and available through September 30, 2020. For more information regarding this program, visit Information for Borrowers.