In our September Good News in CRE newsletter we announced that the SBA had opened the EIDL portal for new loans. Previously capped at $500,000, now businesses can apply for up to $2M in funding. The loans have a 30 year amortization with a 24 month deferment option and can be used to pay, or even prepay, commercial debt. Loan amounts are based on 2019 revenues and cost of goods sold.
The application window for the EIDL is December 31, 2021. No new applications will be reviewed after that date. Therefore, businesses should apply today!
For businesses, the loan rate is 3.75% fixed. With hints that the Fed will be increasing interest rates two, if not three times, in 2022, this is the ideal time to move to a fixed rate solution. Most businesses have taken advantage of the low variable rates over the past few years, and rightfully so. However, a rate hike would mean those variable rates increase with prime. Locking into a 3.75% SBA loan could mean huge cost savings for businesses in the future.
Additionally, the SBA-backed EIDL loan can now be used for even more expenses. The biggest change to the usage of funds is the prepayment of debt. “Essentially, you can pay down the entire outstanding balance of a commercial loan obtained through traditional lenders with your EIDL funds,” according to Bench.com.
For more information or to apply, visit the SBA site and use your original EIDL application number (if you applied previously.)