Last week, the Small Business Administration (SBA) made a welcome announcement for small business owners with Economic Injury Disaster Loans (EIDL) — for the third time in the past 12 months, they have announced that the deferral period for making payments on loan and interest has been extended.
As Journal of Accountancy points out, “the announcement Tuesday came exactly one year after the SBA had lengthened the deferral period from 12 months to either 18 months for loans made in 2021 or 24 months for loans made in 2020. In September, the SBA unveiled several major modifications to the program, including an extension of the deferral period for 2021 EIDL payments to 24 months as part of a series of major modifications designed to broaden the appeal of the program.”
One thing to keep in mind, however, is that borrowers taking advantage of this deferral will still be liable once their deferment period is up, to pay the principal plus interest on the whole period (including the extra deferred months). At around 3 percent, this is considered inexpensive compared to other loans, but it adds up.
We encourage borrowers to log into their SBA EIDL portal once-a-month to download the monthly EIDL statement and provide it to their bookkeeper or accountant to accrue the interest. Not only is this a good bookkeeping practice, but they may be surprised at the amount of interest that has accrued, which could change their approach toward either holding off or repaying it sooner. Unfortunately, if they don’t log into their SBA portal every 30 days, the password expires — so this is a way to avoid that issue and an added benefit of this approach.
Instructions for creating an account are here:
According to Inc. Magazine, “the announcement arrives just days after a group of 16 senators asked the SBA to extend the deferment period. In their letter, the senators emphasized the challenges that small businesses faced amid the surge of the Omicron variant, which included staffing crunches and drops in revenue. Those same challenges continue to linger for many businesses today.”
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