The Small Business Administration is providing Covid relief recipients who borrowed to keep their companies afloat with extended deferments that gives them 30 months to start repaying the loans, agency Administrator Isabella Casillas Guzman announced.
The latest deferment for Covid Economic Injury Disaster Loan (EIDL) recipients provides borrowers with an additional six months to repay their EIDL loan after Guzman granted a 24-month deferment last September.
“The extended deferment period will provide additional flexibility to small business owners impacted by the pandemic, especially those in hard-hit sectors managing disruption with recent variants, as well as recent supply chain and inflation challenges amid a growing economic recovery,” she said.
Since its inception, the EIDL federal disaster relief loan program has provided more than $351 billion in relief to 3.9 million borrowers, the SBA said.
“This extended principal and interest deferment will provide financial relief to millions of small business owners—particularly those hardest-hit by the pandemic and related marketplace challenges—so they can continue to pivot, adapt, and grow,” Guzman added.
This deferment extension is effective for all EIDL loans approved in 2020, 2021 and 2022, the SBA said. Interest will continue to accrue on the loans during the deferment and deferments may result in balloon payments, the agency warned.
Borrowers may make partial or full payments during the deferment period, but have no obligation to do so, the agency said.
After the deferment period ends, borrowers will be required to make regular principal and interest payments, the SBA said.
In September 2021, Guzman announced she was giving EIDL borrowers additional flexibility, including increasing the loan cap from $500,000 to $2 million and instituting a 24-month deferred payment period.
Guzman also expanded EIDL’s eligible loan uses, greenlighting their use to prepay commercial debt and make payments on federal business debt. The loans can also be used for any business expense, including meeting payroll, the agency said.