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The Small Business Administration on Thursday announced improvements to its disaster lending program to help more small businesses access government financial support as the Delta variant of COVID-19 continues to stumble operations nationwide.
On the one hand, the SBA is increasing the loan limits in its economic disaster lending program – low interest loans payable over 30 years – from $ 500,000 to $ 2 million. The funds can be used for all operating expenses, including the purchase of equipment and debt repayment.
The SBA is also delaying loan repayments for two years after their inception to give small business owners the flexibility to “weather the pandemic without having to worry about making ends meet,” the SBA said in a statement Thursday.
For 30 days, the SBA will only approve and disburse funds for loans of $ 500,000 or less, to ensure that smaller businesses have access to relief funds.
The SBA has also streamlined the application, approval and disbursement processes to provide more business support. Eligible businesses can apply for loans through the SBA website until December 31, 2021. Paycheck Protection Program loan recipients can also apply for EIDL funds.
Today, the SBA processes more than 37,000 claims per day, up from around 2,000 a day earlier in the pandemic. The productivity of loan officers has increased from 1.86 requests per day to 15 per day, according to the administration. The SBA said it cleared its black journal of nominations and processed new nominations immediately.
“SBA’s COVID Economic Disaster Loan Program Provides a Lifeline to Millions of Small Businesses Still Affected by the Pandemic, “ SBA administrator Isabella Casillas Guzman said in a statement on Thursday. “We have revamped this vital program by increasing the borrowing limit to $ 2 million, providing 24 months deferral and increasing flexibility to allow borrowers to repay higher interest commercial debts. “
The goal of the SBA is “to ensure that every entrepreneur who needs help can get the capital they need to reopen, recover and rebuild,” Guzman added.
Struggling to access capital
Small business owners who still struggle to access capital say they appreciate the initiative.
Forty-four percent of small business owners report having less than three months of cash reserves, and only 31% of small business owners say they are very confident that they can access capital if they need it, according to a Goldman Sachs report. Black business owners fare even worse, according to a survey of more than 1,100 small businesses. More than 50% of black-owned small businesses have less than three months of cash on hand, and only 20% of black-owned small businesses say they are very confident in their access to capital, according to the report.
“We are encouraged and relieved to see the Biden administration prioritizing access to capital for small businesses by updating and expanding the COVID-19 Economic Disaster Lending (EIDL) program,” said said Jessica Johnson-Cope, president of Goldman Sachs 10,000 Small Businesses Voices. National Leadership Council and owner of the Johnson Security Bureau in the Bronx, NY. “This will help small business owners like me have access to affordable working capital as we continue to face ongoing challenges on the road to recovery. “
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