A lending program for small businesses and nonprofits has been re-ignited—and tripled.
The Small Business Association recently announced that its disaster loan program had been re-funded thanks to the most recent COVID relief package.
The program, known officially as the Economic Injury Disaster, or EIDL, also tripled the maximum amount small businesses and nonprofits can borrow.
This meant raising the loan limit for the program from six months of economic injury with a maximum loan of $150,000 all the way up to 24 months of economic injury with a maximum loan amount of $500,000.
“The program has been around for quite a while,” said Cashin White, director of growth and innovation at BOK Financial®. “It’s essentially a loan program where a business owner can go to the SBA directly and apply for the loan if they are currently experiencing a temporary loss of revenue due to some sort of disaster—like the pandemic.”
He said in past iterations of the program, the funding pool was substantial. “But Congress only appropriates a certain amount of money for this program, and it was extinguished fairly quickly last year,” he said. “The coffers have been empty but this last stimulus bill injected a fresh round of funds.”
A fundamental difference between this loan and others, like the PPP, is that it can be used at the business or nonprofit owners’ discretion.
“The PPP covers payroll, but what about everything else?” White said. “Disaster loan proceeds can be used for working capital and normal operating expenses.”
The SBA requires that the program’s loan applicants be physically located in the U.S., or a designated territory, and have suffered working capital loss due to the pandemic.
Additional eligibility requirements include:
- Businesses with 500 or fewer employees or defined as small business per SBA.gov/sizestandards
- Cooperatives with 500 or fewer employees
- Agricultural enterprises with 500 or fewer employees
- Most private organizations
- Faith-based organizations
- Sole proprietorship and independent contractors
More information on eligibility and applications can be found on the SBA website.
“This gives business owners the flexibility to apply the funds where they need it most,” White said. “And even the ability to complement it with a PPP loan. This is great news for small businesses, their communities and the economy.”
. © 2024 BOKF, NA.