The Small Business Administration is set to triple loan amounts for businesses hurt by Covid

Personal finance

A small business owner in Chinatown, San Francisco
Source: CNBC

Beginning April 6, small businesses and non-profits can apply for up to 24 months of relief, with a maximum loan amount of $500,000, the Small Business Administration announced Wednesday.

The previous limit for such businesses was six months, with a maximum loan amount of $150,000.

“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,” SBA Administrator Isabella Casillas Guzman said in a statement. “However, the pandemic has lasted longer than expected, and they need larger loans.”

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How to apply

The EIDL program offers businesses 30-year fixed-rate loans that provide capital for normal operating expenses, including health-care benefits, rent, utilities and fixed debt payments, for a certain period. These loans are not forgivable, unlike EIDL Advance loans or money lent through the Paycheck Protection Program.

Eligible small businesses and non-profits can apply for loans through the end of the year and may continue to request additional funds even after the Dec. 31 deadline, according to the SBA.

The SBA to give guidance on topping up loans

There is also good news for borrowers that have already applied or received loans through the SBA program. Some loans approved prior to the week of April 6 will be eligible for an increase based on the new maximum amounts announced Wednesday.

In addition, businesses that previously received loans but would like to be considered under the new guidelines do not have to take any immediate action, the SBA said.

The agency will reach out to those businesses via email closer to the April start date with more information about requesting an increase. Applicants that already accepted a loan calculated under the previous guidelines have up to two years after the date of issuance to ask for additional funding, according to the SBA.

The EIDL program has approved about 3.75 million loans worth a total of more than $200 billion through March 18, according to the SBA. Nearly 80% of those loans are for less than $100,000.

The move to send more loan money to struggling small businesses comes as the Senate prepares to vote on extending the Paycheck Protection Program through May 31 instead of ending it on March 31.

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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.

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