All small businesses that received a COVID-19 Economic Injury Disaster Loan (EIDL), now have the opportunity to defer payments until next year. That’s correct! On March 16, the US Small Business Administration (SBA) announced that it extended EIDL payments and other disaster loans, until 2022. 

Purpose of EIDL Loans

The COVID-19 EIDL program was introduced for small businesses, non-profits of any size, and agricultural enterprises within the United States. The idea is to provide economic relief to those who have been facing substantial economic injuries, as a result of the Coronavirus pandemic.  These loans are offered at very affordable terms. They have a 3.75% interest rate for small businesses and a 2.75% interest rate for non-profit organizations, and 30-year maturity.

SBA officials pointed out that small businesses, including self-employed individuals, contractors, and gig workers, are still navigating the effects of the pandemic. Some also faced severe winter storms in 2020. It is with this in mind that the SBA has decided to offer extended EIDL payments.

What Does Extended EIDL Payments Mean?

Extended EIDL payments mean that if your organization received and used the loan as prescribed, you will have more time to prepare. Instead of starting to repay your loan within the period initially stipulated, you will have a couple of months before you need to start financing your loan.

If your loan was made in 2020, you would have been given 12 months from your date of the note to repay. With this extension, you now have an additional 12 months before your first loan payment. So, your loan which had a 12-month due date now has a 24-month due date. For loans received in 2021, this extension is slightly different.

Anyone who has received a disaster loan in 2021, including the COVID-19 EIDL, will have their loans extended by an additional 6 months. This means that your loan which was due 12-months after your date of note is now due 18 months after. Your loan repayment is still due in 2022.

What About Other SBA Disaster Loans?

Disaster loans, other than EIDL, approved prior to 2020 received an automatic deferment of principal and interest payments. Deferrment of loan repayment in regular servicing status as of March 1, 2020 were extended to December 31, 2020. This initial deferment period was subsequently extended through March 31, 2022. An additional 12-month deferment of principal and interest payments will be automatically granted to these borrowers. This means borrowers will resume their regular payment schedule with the payment immediately preceding March 31, 2022, unless the borrower voluntarily continues to make payments while on deferment. 

Feel free to connect with us if you need any kind of assistance with your bookkeeping before tax deadlines. We are a full-service virtual bookkeeping company that focuses on helping startups and small businesses maximize their profitability. We’re happy to help.

Sourced from The Small Business Association

Further questions on SBA COVID-19 EIDL and disaster loan payments can be answered by email at DisasterCustomerService@sba.gov or by calling SBA’s Customer Service Center.

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