SBA: Cash-strapped COVID-19 disaster loan program
The federal government’s COVID-19 disaster loan program for small businesses and nonprofits ran out of money on Saturday, hours after a deadline for borrowers to apply for additional loan funds, according to an email notification obtained by Newsday.
The U.S. Small Business Administration, in the message to borrowers, said all funds in its COVID-19 Economic Disaster Loan Program “have been exhausted.”
“We are unable to continue processing your application due to the lack of funding available for the COVID-19 EIDL loan program,” the message read. “The SBA is no longer processing requests for EIDL COVID-19 loan increases or requests for reconsideration of previously denied loan applications under this program.”
The agency stopped granting new loans weeks ago.
Saturday’s notification was sent about 1 p.m. after the Friday 11:59 p.m. deadline set by the SBA for existing COVID EIDL borrowers to apply for more loan funds before the program ends.
The agency did this because some borrowers may be eligible for larger loans than are available in 2020 and early 2021. At that time, the SBA, under then-President Donald Trump, reduced the maximum loan amount of $2 million per applicant to $150,000 to ensure the funds were not depleted.
President Joe Biden’s administration reinstated the largest loans after Congress authorized more COVID EIDL funding.
The deadline also applied to small businesses and nonprofits seeking a review of loan applications that had been denied earlier.
An SBA spokeswoman did not respond to requests for comment over the weekend.
COVID EIDL loans have a term of up to 30 years and an interest rate of 3.75% for businesses and 2.75% for nonprofits.
More than 3.9 million COVID EIDL loans, totaling $378.4 billion, have been issued nationwide since the coronavirus hit more than two years ago. In New York state, there are 339,354 loans, totaling $37.6 billion, the second highest in the nation after California, according to agency data as of April 28.
In March, the SBA gave borrowers up to 30 months of deferral before they had to start repaying their loan. The decision was in response to a request from Sen. Chuck Schumer (DN.Y.) and supported by 15 other Senate Democrats.
Saturday’s email message said COVID EIDL borrowers will no longer have access to loan documents and other information through the application portal at covid19relief1.sba.gov after May 16.
“The SBA has local offices in your community that can direct you to resources that can help your business in other ways,” the post said, adding that more information is available at sba.gov/local-assistance.