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    EIDL: Interest and Payments

    December 2020

    At the start of the pandemic, Congress created two loan programs to help small businesses and the self-employed mitigate the economic impact COVID-19: the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL).

    While our webinars and blog posts have focused heavily on the PPP (our clients utilized these in far greater number), we felt it was important to return our attention to the EIDL and clear up misconceptions about the one-year grace period for payments and how interest accrues on the loan.

    The EIDL is a 30-year loan with an interest rate of 3.75% (2.75% for nonprofits), meaning a loan to a business of $150,000 will accrue over $5,600 in interest over the year of deferment. Though no payments are required during the first year of the loan, interest still accrues during this deferment period. The EIDL loan is not forgivable, though the EIDL grant of $1,000 per employee, up to $10,000, is.

    If you no longer need the cash or are otherwise in a position to pay now, despite the allowed deferral of payments, you may want to pay back your EIDL early to stop the interest from accruing. There is no prepayment penalty.

    For help on how to do that, please reach out to us. With no payments due yet, the SBA isn’t sending any statements or payment stubs.

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