An early draft version of the new SBA EIDL loan program rule changes was posted September 7, 2021, as part of the expected "EIDL 2.0" update. The rules are set to go live officially on Wednesday September 8, 2021. There are 5 important changes in the rules outlined below and an update on the EIDL loan increase.
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EIDL Affiliate Rules Changed
The first EIDL rule change relates to definitions of an affiliate, a rule change because of "continuing confusion and burdensome analyses required by applicants and SBA". The expanded definition says that an affiliate is a "business in which an eligible entity has an equity interest or right to profit distributions of not less than 50 percent". This will likely allow more businesses to become eligible for EIDL funding.
EIDL Affiliate Rule Change
EIDL Denial and EIDL Reconsideration Change
The second EIDL rule change relates to who has the authority to review EIDL reconsiderations and make decisions at the SBA. In an attempt to speed up processing the SBA has broadened the definition to include not only the Director, and Disaster Assistance Processing and Disbursement Center — the existing authorities — but also to include "or the Director's designee(s)."
It is likely that the EIDL reconsideration backlog continues to grow and this rule change will likely allow a more streamlined review of applicants who've been denied EIDL loans and have applied for reconsideration.
EIDL Reconsideration Review Authority
EIDL Eligibility Change Based on Business Type
The third EIDL rule change relates to certain types of "hard-hit businesses" that may now qualify for EIDL loans. These are businesses, deemed by the SBA, to still be largely disrupted economically due to the pandemic.
These business types include businesses under the NAICS that start with 61, 71, 72, 213, 3121, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812. It is likely this change will allow more larger businesses to get help via the EIDL loan program now.
EIDL Eligibility Changes for Certain NAICS Business Types
EIDL Eligibility Change Based on Business Type
The forth EIDL rule change — and perhaps the most impactful to businesses — is allowing expanded eligible uses of funds, which includes paying off other business debt. This includes monthly payments, payments of deferred interest, and pre-payments on any-business debts.
EIDL Eligible Use of Funds Includes Business Debt
EIDL $10 Million Total Limit for Corporate Groups
The fifth and final change mentioned in the interim EIDL rules adds a new maximum loan amount to a single corporate group of $10M. According to the SBA this strikes a balance between helping businesses who need assistance and assuring there is enough funding available for the expected increase in new applications.
EIDL $10M Loan Limit for Corporate Groups
EIDL Loan Increase from $500K to $2M
Finally — even though it is not mentioned in the interim rule changes — it is expected that the $2M EIDL loan limit will also go into affect on September 8, 2021 as well.
According to our sources, the SBA doesn't need to seek a "rule change" for the $2M limit since they already have approval to do that. The SBA just needs to make the policy change which they have already stated they will do.
Final thoughts on EIDL 2.0
In some way, shape, or form, these new rule changes will affect your business and business funding. We highly recommend considering getting personalized help to talk through your specific situation if you're serious about appropriate funding for your business. Check availability and book a spot to talk with us today before the spots fill up!
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