Small businesses, nonprofits and farms can now receive up to $ 2 million in federal disaster loans, or four times the limit set in the spring, authorities 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 Injury Disaster Loans (EIDL). The loans, which are funded by the federal treasury, had been limited to $ 500,000 per applicant.
In addition to the higher maximum EIDL, the SBA has made the loans available to more restaurants because a program for them, the Restaurant Revitalization Fund grants, ran out of money in weeks. Restaurants, along with gyms and hotels, are among the worst hit industries.
WHAT TO KNOW
- The maximum amount of federal COVID disaster loans for small businesses is now $ 2 million, up from $ 500,000.
- More restaurants are eligible for Economic Injury Disaster Loans, or EIDL.
- Borrowers have up to two years before you start repaying the loan, even though interest accrues during the deferral period.
“With the delta variant, the fight is far from over,” SBA Administrator Isabella Casillas Guzmán said late last month in an open letter to EIDL applicants. “Small businesses across the country continue to need financial help to get to the other side of this crisis.”
On Wednesday, SBA officials said borrowers who received EIDL with a lower limit may be eligible for additional funds. However, the December 31 deadline for the SBA to receive applications has not changed.
“Thousands of millions [of dollars] they are still available, “said Matt Coleman, a spokesman for the agency’s Region II, which includes New York state.
The SBA has made 3.8 million loans since the pandemic broke out in spring 2020, totaling $ 270.5 billion at the end of last month, agency data shows. New York State has the third-highest number of loans after California and Florida: 325,425 loans totaling $ 25.8 billion. The Long Island data 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 due to fears the program would run out of money, Newsday reported at 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 have an interest rate of 3.75% for small businesses and farms and 2.75% for non-profit organizations. The term is up to 30 years and payment can be deferred for two years, although interest will accrue during the deferral period, the SBA spokesman said Wednesday.
Applicants must have 500 employees or less in most cases. Information on how to apply can be found at sba.gov/eidl.
Republicans criticized the higher EIDL cap, citing an October 2020 report from the SBA’s Office of Inspector General that found fraud was “rampant” on the program under the Trump administration.
“As of October 2020, it was reported that $ 78.1 billion from US taxpayers was potentially subject to massive amounts of waste, fraud and abuse within the EIDL program, and yet the SBA has refused to do anything to safeguard this program, “said the representative. Blaine Luetkemeyer of Missouri, the top Republican on the House Small Business Committee, said last month.
Guzman, Biden’s designated agency administrator, said: “The SBA has increased fraud controls and is working in collaboration with the SBA Inspector General to closely monitor the program,” which he acknowledged was not the case. last year.
Up to 35% of the $ 225 billion in pandemic-related EIDL disaster loans and grants approved between April 2020 and June may be fraudulent, according to a Newsday analysis of SBA data.