The federal government’s COVID-19 disaster loan program, also known as the Economic Injury Disaster Loan (EIDL) for small businesses and nonprofits has officially run out of money on Saturday. The U.S. Small Business Administration sent a message to borrowers indicating that all funds “have been exhausted.”
A note followed that read “We are unable to continue processing your application due to the lack of available funding for the COVID-19 EIDL loan program… SBA is no longer processing COVID-19 EIDL loan increase requests or requests for reconsideration of previously declined loan applications under this program.”
While running out of funds was inevitable, many thought that they still had plenty of time to make requests for increases to their original loan. The notification sent out Saturday was nearly 13 hours after the 11:59 PM Friday deadline originally set by the SBA for existing COVID EIDL borrowers to request additional funding before the program ended.
COVID EIDL loans came with a term of up to 30 years with an interest rate of 3.75% for businesses and 2.75% for nonprofits. There were more than 3.9 million COVID EIDL loans issued, totaling north of $378 billion. In New York State, there are nearly 340,000 loans totaling more than $37 billion, the second most nationwide other than California, according to agency data. In March, the SBA announced that borrowers had up to a 30-month deferment available before they must begin making loan payments.
At this time, employers with questions have been asked to contact local SBA offices in their dedicated community who can refer you to resources that may be able to assist your business in other ways.
Where do we go from here?
The Employee Retention Credit (ERC) has undoubtedly proven to be one of the most effective tax policies catered towards helping small and medium-sized businesses around the country. This credit is the last standing form of COVID-19 relief available to employers. The cash refund the credit generates has helped scores of businesses weather the economic impact of the pandemic. The credit provides up to $5,000 per employee in refundable tax relief for 2020. For 2021, the incentive increased to $7,000 per employee per quarter in refundable tax relief. The IRS is responsible for issuing the cash refunds that come in the form of checks from the US Treasury.
As has been suggested in past articles, the ERC is a wildly misunderstood tax benefit – with small and medium-sized business owners and managers either not knowing about the credit or being wrong about the credit due to following outdated guidelines, having been given bad information from counsel, or think the incentive is too good to be true.
In practice, ERT Credit has found that an extremely diverse range of businesses are excellent candidates for the ERC. For many business owners and managers of non-profits, the ERC remains the go-to relief as it relates to the pandemic and one of the last sources of a cash injection that is helping businesses stay afloat. Yet hundreds of thousands of businesses and non-profit organizations around the country are failing to take advantage of the ERC. Billions of dollars are available for businesses and non-profit organizations to both retain and hire new employees. But you must apply.
As leaders in the market, ERT Credit has provided maximized computations to over one thousand employers across the country. See how ERT Credit can help you today by clicking here. No risk, no obligation - pay when you get paid.
