SBA’s Latest Solution? Get a Bigger Loan

The Small Business Administration (SBA) published an interim final rule expanding access to its Economic Injury Disaster Loan (EIDL) program and widening eligible uses for certain businesses. Collectively, the changes offer to ease the growing concerns among many hospitality business owners still struggling amid the ongoing Delta wave. With other aid programs no longer available, the demand for EIDLs is likely to surge.

The biggest change is that eligible restaurant business owners can now increase their COVID-19 EIDL loan amount from $500k to a whopping $2 million. Even though this is an increase in debt, the EIDL is a low interest loan and still a desirable option for hospitality businesses looking for assistance through the pandemic.

As of September 8, 2021, the new COVID-19 EIDL policy changes that have taken effect include the below updates to the program:

• Maximum loan cap increased from $500k to $2 million. Eligible businesses that have already received a loan can now apply to increase their loan.
• Use of funds was expanded to include payment and pre-payment of business non-federal debt incurred at any time (past or future) and payment of federal debt and/or acquired credit card debt (acquired over the past year)
• Extended the deferment period to 24 months from origination for all loans (existing loans with a less than 24-month deferment will be adjusted)
• Affiliation requirements simplified to: an affiliate is a business that you control, or in which you have 50% or more of ownership
• Developed additional path to meet program size standards for businesses assigned a NAICS code beginning with 61, 71, 72, 213, 3121, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812
  • Exclusivity period: From September 8, 2021 to October 8, 2021, the above policy changes will be applicable to applications for <$500K while applications for >$500K will not be approved and therefore will not receive the policy changes until October 8, 2021
  • Added a new regulation limiting entities that are part of a single corporate group to receive a combined total of no more than $10 million in COVID-19 EIDL loans

The program will run through December 31, 2021 or until funds run out. Click here to find more details on the COVID-19 September 8, 2021 Policy Changes.

Restaurant and hospitality business owners considering a loan increase should consult with their advisors to see if the COVID-19 EIDL offered by the SBA is the right option for their business needs. For more information, please email Citrin Cooperman’s Restaurant & Hospitality Practice advisors at restaurant@citrincooperman.com.