It's Your Biz: Federal funds can help businesses impacted by COVID-19 issues

Last week the U.S. Small Business Administration made important changes to the Economic Injury Disaster Loan program that assists small businesses impacted adversely by disasters including COVID-19. The program has been a lifeline for many small businesses needing access to working capital due to the impact of the COVID-19 pandemic on their cash flow and operations. 

Small businesses (and nonprofits) can now request up to $2 million in EIDL funds instead of the previous cap of $500,000 from the SBA through their loan portal at www.sba.gov. You can apply for up to $2 million as of today, but loan funds above $500,000 will not be approved until after Oct. 8. Loan funds up to $500,000 can be awarded immediately upon processing of online applications.   

EIDL also now allows for restructuring of existing commercial and federal debt, which means you can pay off current loans or debts with EIDL funds, increasing the flexibility for most small businesses. With terms of 3.75% for small businesses and 2.75% for nonprofits for up to 30 years, this can be an important tool to reduce debt burden at higher interest rates. You can still use the funds for rent, utilities, payroll and other previously allowable business operational expenses. 

The SBA application process should take about three weeks for requests up to $500,000, six-nine weeks for requests in excess of $500,000. Requests above $500,000 cannot be awarded until after Oct. 8, as noted above. 

If your business is still in need of additional working capital due to the impact of COVID-19, this can be another important tool provided by the SBA. There is no current forgiveness provision for EIDL, so these are loan funds, not grants, Make sure you understand the impact that has on your ongoing business operations before you apply.   

For more details on the EIDL program, feel free to visit the website at https://bit.ly/3tBHMs5.

Steve Bryant is executive director of the Gayle & Bill Cook Center for Entrepreneurship at Ivy Tech Community College-Bloomington and regional director of the South Central Small Business Development Center.