Recently the Small Business Administration (SBA) made some important changes related to the Covid-19 Economic Injury Disaster Loans (EIDL) issued to businesses in 2020 and 2021. Keep reading to learn what the EIDL Loan Deferment for 30 months means for you along with some other news and updates for 2022.

Latest 2022 EIDL Updates from the SBA

The SBA has released several recent updates:

• As of May 6th, Covid-related EIDL funds have been exhausted. The SBA will not accept any more increase requests or reconsideration requests. If your loan was already approved, you must have signed all the necessary paperwork by May 16th to receive it.
• As of March 2022, payments on your EIDL loan are now deferred for a full 30 months from when the loan was received, however, interest IS still accruing (daily!) on these loans even when no payments are due.
• The EIDL loan portal (where you applied for the loan) is CLOSED as of May 16, 2022.  Here’s that portal link that is now closed: https://covid19relief1.sba.gov/Account/Login

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EIDL Loan Deferment FAQ

So you want to know the facts, right? How will all of these updates impact you and the money you owe for your EIDL Loan?  For starters, the EIDL Loan is something that is required to be repaid.  While some other Covid-related funding was forgiven, the EIDL loan has strict repayment terms and there is no expectation that this will change in the future.  You will want to know when your first payment will be due, prepare for EIDL loan payments, and ideally, you want to be paying additional on those loans to get them paid off more quickly. 

I recently called the SBA’s Disaster Assistance Line (1-833-853-5638) to get some answers. Here is what I asked with an overview of what they told me about the SBA EIDL amortization schedule.

Q: How will this 30-month deferral affect payment timing and amounts? 

A: At the final payment of the loan, when it has reached its maturity at 30 years, if they have not yet paid off the loan, there will be one lump sum that is due which will include the additional accrued interest for those additional deferred payments (i.e. a balloon payment). 

My Takeaway: Because the interest is accrued daily on EIDL Loans, it’s going to add up quickly via compound interest which will mean you will end up paying interest on interest. So while the payment deferral period may have been helpful, it does mean additional interest accrued on your loan, especially if you take the full 30 years to pay it off. I highly recommend that you pay it off sooner, especially so that you don’t get to the end of 30 years and have a huge final balloon payment, which I think a lot of people wouldn’t necessarily expect to have.

Q: When should you expect to receive statements about your loan? 

A: The SBA will be sending out statements prior to when the first payment is due and that would be via mail, email, or both. Borrowers will have to create an account on the  SBA Capital Access Financial System (CAFS) : https://Caweb.sba.gov 

My Takeaway: While it may have been a little while since you took out this loan, make sure you don’t forget about it and that you have a plan for repayment.  It is important to know these EIDL loans are not going anywhere and keeping up to date on how much you owe is going to be really important until you are able to get it paid off. 

Q: How do you update your business address with the SBA if it changes since you received the EIDL loan?

A: They can share the address in the portal,  where they will find the application for them, or they can send an email to [email protected]  with their new contact information. 

My Takeaway: Keep your address up to date with the SBA if you have an EIDL loan because they’re going to be sending out statements in the mail.  If you plan to change your business address (i.e. where your business is conducted), I would actually reach out to the SBA disaster customer service email or phone line above and let them know, as technically the SBA is supposed to approve of such changes.  If you do not have a way to be notified when it is time to make a payment you could accidentally go into default. 

Q: What happens if you close your business before you pay off your EIDL Loan?

A: Don’t wait, call the SBA Line to talk with someone today at 833-853-5638.

 

My Takeaway: With these EIDL loans, I recommend talking to someone at the SBA ASAP. I would let them know that you have gone out of business or may be closing your business and talk to them about what may be required.

The next steps will be dependent on the total amount of your loan (first and second draft combined). If your total EIDL was above $25,000, that means you may have put up business collateral when you received the loan (if any exists).  So you would need to talk through with them how that would work. if your loan is over $200,000, that would mean you have a personal guarantee on it, which means your personal assets may be impacted if your business defaults. Make sure you DON’T assume you don’t have to pay it as your business subsequently, as going into default can impact your personal credit (regardless of the amount of your loan).

If you DO think you could default on this loan, I would ensure that you have a good record of what you spent your EIDL money on, with evidence that it went toward business operating expenses (not business expansion, business assets, and not paying yourself more than typical).  This will be critical in case of an investigation into your default.  If you are looking for a tracker (and interest calculator based on your eidl loan interest rate), you can snag mine here for only $17.

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So what’s next if you have an EIDL Loan?

• If you have an EIDL loan, make sure you have signed up for an account at the SBA Capital Access Financial System: https://Caweb.sba.gov where you can view your loan details. Here you can check how much you owe on your loan, as well as your payoff amount and the daily interest you are being charged. 
• To make a payment on your EIDL loan, you will go to https://www.pay.gov/public/home 
• Make a plan for how to pay off your EIDL Loan to help reduce the amount of interest you will owe on it. 

Make a Plan to Pay Off Your EIDL Loan

Need to make a plan to pay off your EIDL loan? I have your back. 

It is important to note if you make early payments (that is before the first one is due after the 30-month deferral timeframe) they are applied to the interest first. Because of the way interest amortization works, interest is front-end loaded and tends to be high at the beginning of a loan (like a mortgage). Also, if you DON’T make any kind of early payments and actually keep this loan for 30 years (which I don’t recommend), you will have a large balloon payment at the end to deal with which basically represents the principal and interest for the first 30 months. 

I created an EIDL interest calculator and tracker, which reflects the new 30-month deferral period. This tracker will help you look at different payback scenarios and the interest impact so you can make the best decisions about your loan. This also allows you to include your first and second draw loans and any repayments you’ve already made in the analysis.  It also gives you a central place to track what you spent your EIDL money on so that you can provide it to the SBA if requested.

Check out my YouTube video where I give you a full demo of the following example. 

💸 If you have not already get your EIDL Calculator & Tracker https://jamietrull.com/eidltracker

Now is the time to stay informed and make a plan for how you want to pay off this EIDL Loan, I believe that knowledge is power. And so I want to help empower you with the knowledge that you need in order to make the best decisions for you and for your business. If you found this helpful, please make sure to check me out over on my YouTube channel, and remember to subscribe to help keep you informed. You can check out additional videos about COVID loans and other things that we have on my channel here: https://youtube.com/jamietrull 

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p.s.

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