Small businesses, nonprofits and farms can now receive up to $ 2 million in federal disaster loans, four times the limit set in the spring, officials said.
The US Small Business Administration, citing an increase in COVID-19 cases due to the delta variant, has raised the limit on its economic disaster, or EIDL, loans. The loans, which are funded by the federal treasury, were limited to $ 500,000 per applicant.
In addition to the higher EIDL maximum, the SBA made the loans available to more restaurants because a program for them, the Restaurant Revitalization Fund grants, ran out of money within weeks. Restaurants, along with gyms and hotels, are among the hardest hit industries.
WHAT THERE IS TO KNOW
- The maximum amount Federal COVID disaster loans for small businesses is now $ 2 million, up from $ 500,000.
- More restaurants are eligible for Economic Disaster Loans, or EIDL.
- Borrowers have up to two years before you start repaying the loan, although interest accrues during the deferral period.
“With the delta variant, the fight is far from over,” SBA administrator Isabella Casillas Guzman said late last month in an open letter to EIDL candidates. “Small businesses across the country continue to need financial help to get to the other side of this crisis.”
SBA officials on Wednesday said borrowers who received EIDLs below a lower cap may be eligible for additional funds. However, the December 31 deadline for receipt of applications by the SBA remains unchanged.
“Billions [of dollars] are still available, ”said Matt Coleman, spokesperson for the agency’s Region II, which includes New York State.
The SBA has granted 3.8 million loans since the start of the pandemic in the spring of 2020, for a total of $ 270.5 billion at the end of last month, according to agency data. New York State has the third highest number of loans after California and Florida: 325,425 loans totaling $ 25.8 billion. Data for Long Island was not immediately available.
The new loan limit brings the EIDL program back into compliance with federal law.
In the spring of 2020, the SBA under then-President Donald Trump quietly lowered the loan limit to $ 150,000 from $ 2 million over fears the program might run out of money, Newsday reported to the time. Senate Democrats, led by Charles Schumer (DN.Y.), accused the SBA of breaking the law. In April, President Joe Biden raised the EIDL limit to $ 500,000.
The loans carry an interest rate of 3.75% for small businesses and farms and 2.75% for non-profit organizations. The term can be up to 30 years and repayment can be deferred for two years, although interest will accrue during the deferral period, the SBA spokesperson said on Wednesday.
Applicants should have 500 employees or less in most cases. You can find information on the application process at sba.gov/eidl.
Republicans criticized EIDL’s higher limit, citing an October 2020 report from the SBA Inspector General’s office that found fraud “rampant” in the program under the Trump administration.
“As of October 2020, it was reported that $ 78.1 billion in U.S. taxpayers were potentially subject to massive amounts of waste, fraud and abuse within the EIDL program, and the SBA has consistently refused to do anything to protect this program, ”said the representative. Blaine Luetkemeyer of Missouri, the House Small Business Committee’s top Republican, said last month.
Guzman, the agency administrator appointed by Biden, said: “The SBA has stepped up fraud checks and is working with the SBA Inspector General to closely monitor the program,” she said. recognized was not the case last year.
According to a Newsday analysis of SBA data, up to 35% of the $ 225 billion pandemic-related EIDL loans and grants approved between April 2020 and June could be fraudulent.