As the country begins to reopen, businesses find themselves recovering from the losses incurred this past year. After over a year of closures, losses, and emergency planning, it will take some time for those businesses to be fully back to normal.
Various loans and grants have been issued throughout the pandemic to offer aid to those businesses with payroll, protective equipment, and various other operating costs. These loans and grants have helped keep businesses’ doors open. Now with the economy coming back, the U.S. Small Business Administration recognizes that small businesses need more time to fully recover.
In response, they have declared that Disaster loans, including the COVID-19 Economic Injury Disaster Loan (EIDL), will have extended deferments until 2022.
Disaster Loans Made in 2020 – These loan payment dates will no longer be 12 months from the date of the note. It has now been extended to 24 months from the date of the note, landing in 2022.
Disaster Loans Made in 2021 – These loan payment dates will no longer be 12 months from the date of the note. It has now been extended to 18 months from the date of the note, landing in 2022.
The extension of this loan can offer some benefit to business owners who are struggling to make the payments, but there are some points that should be considered by business owners with loan payments still pending. Payment due dates have been extended but interest will continue to accrue from the outstanding loan balance. (Please talk to your CPA or financial adviser before making a decision to defer or continue making payments)
The borrower does have the option to continue to make payments while being on deferral.
According to SBA Administrator Tami Perrillo, “The COVID-19 EIDL has assisted over 3.7 million small businesses, including non-profit organizations, sole proprietors and independent contractors, from a wide array of industries and business sectors, through this challenging time.”
Businesses will find these loans to be very affordable with a 3.75% interest rate for small businesses and a 2.75% rate for non-profits, both have a 30-year maturity. As stated above, interest will continue to accrue but business owners do have the option to make partial or full payments if they like.
In mid-February 2021, the SBA found the program to be a success after approving over $200 billion in emergency funding for low-interest loans. Today, the SBA finds itself approving $500+ million each week.
If you find your business is in need of financial assistance, know we help you from beginning to end. From organizing your financial statements to spending compliance.
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