The Small Business Administration (SBA) has reduced the maximum loan amount available under a disaster emergency loan program for U.S. small businesses by 92%. Meanwhile, the SBA currently only allows agricultural businesses to apply for the Economic Disaster Lending Program (EIDL).
The Washington Post recently unveiled changes made by the SBA to the EIDL. The SBA had not publicly communicated the changes – which included reducing the maximum amount of loans available from $ 2 million to $ 150,000 – to businesses or to Congress.
In a May 9 letter, three Democratic senators criticized the SBA, saying the organization had mismanaged the large federal aid package when it was most needed. The company’s shutdown measures to control the spread of the coronavirus have devastated the United States economy, with unemployment reaching its highest level since the Great Depression.
“Throughout the response to the COVID-19 pandemic, the SBA has repeatedly made it more difficult for [the disaster loan program] to serve struggling small businesses looking to SBA for the capital they need to stay afloat, ”wrote the senses Chuck Schumer (NY), Ben Cardin (MD) and Jeanne Shaheen (NH).
In recent relief bills, Congress granted EIDL more than $ 50 billion in new funding. The funding injection was intended to help accelerate fast-execution loans to businesses suffering amid the COVID-19 pandemic.
Shocked American business leaders have flooded the SBA with EIDL applications. SBA officials told the Washington Post that the agency faces a backlog of millions of applications.
“Agency officials said the delay was due to a lack of funding and an unprecedented crush of applications,” the Post reported.
EIDL is a long-term program. Thanks to it, small businesses affected by disasters can receive low interest loans directly from the government. The program differs from the $ 669 billion Paycheck Protection Program (PPP), which operates through private banks. The PPP has also had problems, with some promotional product companies reporting a complicated application process and prolonged silence from lenders.