The U.S. Small Business Administration is more than tripling the maximum amount that small businesses and nonprofits can borrow under the COVID-19 Economic Injury Disaster Loans (EIDL) program. Beginning today, the U.S. Small Business Administration (SBA) is expanding its Economic Injury and Disaster Loan (EIDL) program, the organization announced in a press release. Small businesses who originally took out an EIDL loan for up to $150,000 for six months can extend that loan for up to 24 months and receive additional funds for a total of $500,000 in relief.
“More than 3.7 million businesses employing more than 20 million people have found financial relief through SBA’s Economic Injury Disaster Loans, which provide low-interest emergency working capital to help save their businesses,” said SBA Administrator Isabella Casillas Guzman in a news release. “However, the pandemic has lasted longer than expected, and they need larger loans.”
Additionally, the SBA has extended the deferment period for both Paycheck Protection Program (PPP) and EIDL loans through 2022. The first payment for all coronavirus related disaster loans disbursed in 2020 won’t be due until 24 months of loan origination. The first payment for loans issued in 2021 will be due 18 months from the loan origination date.
Typically, forgiven loans qualify as taxable income. However, given the unprecedented circumstances of the pandemic, the Internal Revenue Service has made EIDL Advances and forgiven EIDL funds non-taxable. EIDL advances do not count as part of a businesses gross income, according to IRS notice N 2021-06.
Additionally, the same notice says that business expenses that are normally tax deductible, including rent, payroll and utilities, are still deductible for the 2020 tax year even if those expenses were paid using funds from an EIDL loan or an EIDL advance.
For more information, please visit the SBA.gov website