The US Small Business Administration (SBA) has announced that small businesses that have received an Economic Injury Coverage Loan (EIDL) from COVID-19 will not have to start repaying the loan until 2022.
In a press release issued Friday night, the SBA announced extended grace periods for all of its disaster relief loans, including EIDL loans for COVID-19. The details of the grace period vary depending on the calendar year in which the disaster loan was made.
- For all SBA disaster loans issued in 2020, the first maturity is 24 months, not 12 months from the note date.
- For all SBA disaster loans issued in 2021, the first installment period is 18 months, and from 12 months from the date of the note.
The SBA also provided an additional 12-month grace period for principal and interest payments on existing 2020 approved disaster loans that were in regular service status as of March 1, 2020. This is the third grace period for these loans. The SBA provided an automatic grace period for principal and interest payments until December 31, 2020, and then extended the grace period until March 31, 2020. The final grace period means that borrowers do not need to resume their regular payment schedule until the immediate payment is made. until March 31, 2022
Borrowers may voluntarily continue to make payments during the grace period as interest will continue to accrue on the outstanding loan balance during that period.
The SBA has approved over $ 200 billion in COVID-19 EIDL loans to over 3.7 million small businesses and non-profit organizations. The loans have a 30-year maturity with an interest rate of 3.75% for small businesses, including sole proprietorships and independent contractors, and 2.75% for non-profit organizations.
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– Jeff Drew (Jeff.Drew@aicpa-cima.com) this is JofA senior editor