The pandemic left a huge impact on businesses, forcing many to temporarily or permanently shut down operations when the outbreak began. Up until today, businesses continue to reel from the negative economic effects due to all the mobility restrictions and shifts in consumer spending behavior.
In response to this, the US Small Business Administration (SBA) announced that it would expand its COVID Economic Injury Disaster Loan (EIDL) program. The new modifications can have implications for your company’s finances, so we are here to help you sort this out in time for the tax season. Avoid overpaying taxes and protect your company’s bottom line by taking charge of your finances today.
What is EIDL and what does it do for small business owners?
EIDL stands for Economic Injury Disaster Loan. It is a program put out through the SBA for the purpose of providing funds to small businesses trying to meet financial obligations and operating expenses they are struggling to meet due to a national disaster like COVID-19.
Small business owners can work with their CPAs, professional bookkeepers, or accounting teams to pull together financials to apply for the EIDL program through the SBA, but up until recently, funding had been limited or was unavailable to some businesses due to restrictions and guides of the loan.
Changes to the EIDL Program Expands Available Funding
If you have a small business, you may benefit from the changes recently made to the EIDL program due to the Delta variant. These changes include the following:
- Increase of loan limit from $500,000 to $2 million
Businesses that need funds for operating expenses and working capital can now take up a loan of up to $2 million with a repayment period of 30 years. The loans can also be used to prepay commercial debt and pay back interest and principal for federal business debt.
The interest rate for these loans is set at 3.75% for small for-profit businesses and 2.75% for nonprofit organizations.
- Deferred payment period
To help small business owners cope with the effects of COVID-19 and stay afloat during this time, the government also imposed a deferred payment period of two years. During this time, interest will accrue, but you can start making repayments two years after taking the loan, resulting in a 28-year pay period.
- 30-day window for loans of $500,000 or less
According to the SBA, it will process and approve loans of $500,000 or less within a 30-day period from September 8 to October 8. It will then start approving and disbursing loans of over $500,000 after the 30-day window. This provision was made to ensure that the smallest businesses will be able to get loans to survive amid the pandemic.
- Streamlined application process
The SBA has streamlined the overall application and disbursement process to make it easier for small businesses to get loans. This way, more businesses can apply for loans without encountering too many difficulties along the way.
With a Goldman Sachs survey showing that 44% of businesses have less than three months of cash reserves, the changes will be significantly helpful for them. Several small business owners still struggle to access capital during these difficult times, so the EIDL program is designed to provide adequate support to them.
Applications will only be accepted until December 31, 2021, so if your small business needs funds for operations, it may be worth taking out a loan from the program.
Protect Your Bottomline
The pandemic has shaken the business landscape, causing many industries to struggle financially. While restrictions have slowly eased, many are still recovering from losses and trying to bounce back from the harsh effects of the unfortunate events of 2020.
With tax season fast approaching, we are here to help you file your returns properly so that you can maximize your returns. You might not realize it, but small businesses often overpay taxes for many reasons, such as failing to list down a deductible item or submitting returns on time. Thus, working with professionals who understand the tax codes and relevant documents can ensure that you save as much money as you can from taxes.
To learn more about how you can protect your company’s bottom line and earn more income, Andrew Stauff, from M&E Catalyst Group also talks about various financial strategies to leverage in 2022. In addition, he discusses ways to infuse businesses with new investment income and use wealth-building strategies to avoid overpaying taxes.
Take Charge of Your Finances Today
Not sure if your small business needs to get a loan from the EIDL program? Carefree Bookkeeping Service LLC can manage your books and provide solutions for your accounting needs. Allow us to take charge of your finances so that you stay liquid and keep your bottom line positive.
If you need to borrow funds from EIDL, we can help you manage your debt to ensure that you maintain a healthy ratio and loan just the right amount to keep your business operating.
To learn more about what we do, feel free to contact me at 612-986-1192 or visit our Scheduling Page and request to set up a free initial Discovery Call to discuss what your business needs and how we can help out.