Is Your EIDL Forgivable?

Is Your EIDL Forgivable?

One of the loan programs specifically aimed at small business owners is EIDL. However, there are various misconceptions about EIDL.

One of the frequently asked questions is whether EIDL is forgivable. A business could avail the loan to cover 6 months of working capital funds or $150,000 whichever was lower.

With new enhancements to the EIDL in March 2021, an enterprise can get loans to a maximum of $500,000. If the 24-month working capital requirement is less than $500,000, then only the actual working capital amount will be approved as a loan.

EIDL is a non-forgivable loan provided by SBA to small business owners who have to repay it after a deferment period. SBA has stated that the loan payments will become due after March 31, 2022.

Just like a regular loan, businesses have to repay the principal along with the interest. Another interesting factor is that interest on the loan accrues in the deferment period also.

Conclusion: Though EIDL is not a forgivable loan, businesses can still benefit from it due to the long repayment period and low interest rate. A full understanding of what it means for your business and the burden of a loan should be analyzed.

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