The U.S. Senate Small Business Committee held a hearing on Aug. 2 to discuss the Small Business Administration’s Economic Injury Disaster Loan program, which as part of the original COVID-19 disaster response, has distributed four million loans, totaling $380 billion to small businesses in crisis during the pandemic.
Small Business Committee Chair Sen. Benjamin Cordin (D-Md.) is urging the SBA to finising processing applications and distribute the $800 million left in the EIDL subsidy, which could provide more than $7 billion in loans to the 166,000 small businesses that either were approved and never received a loan, or never received a response from their application.
“In many instances, according to casework notes that we have, small business owners think they have given adequate information or could give the adequate information to complete their applications, but they have not been given an opportunity to do that,” Sen. Cordin said during the hearing. “So, I urge you, for those whose applications can be adjudicated—whether it’s a reconsideration or increased loan amount—the SBA must get those resolved. The numbers are getting small enough that it seems that the SBA should be able to handle those with the type of service that would be expected from the SBA… The SBA has to complete these applications…These small business owners need to know.”
The EIDL program was originally created in March 2020 to provide a boost to small businesses struggling during the pandemic that do not have strong banking relationships, and therefore might have had difficulty getting a Paycheck Protection Program loan. The original loans, created during the Trump administration, had a 3.75% interest rate for small businesses, a 30-year maturity and an automatic deferment of one year before monthly payments began. In April 2020, the SBA said it had run out of funding, but was refilled in the second round of COVID relief passed in Dec. 2020.
On July 15, a few weeks prior to the hearing, Cardin and Senators John Cornyn (R-Texas), Chris Van Hollen (D-Md.), and Roger Wicker (R-Miss.), along with 44 other senators, sent a letter to the SBA, urging the agency to process the applications that were sent in before the May 6, 2022 EIDL final deadline. Many business owners that sent in their applications on time have complained that the SBA has deemed their applications “unworkable,” and many had to submit their paperwork multiple times due to human and system errors and have been told that the EIDL is out of funds, despite the $800 million leftover funds.
The SBA has not only been sitting on leftover funds from the EIDL program. In July, a government accountability report found that the Restaurant Revitalization Program fund has $180 million leftover, which the SBA promised would be distributed to restaurants in need, though there was no detail provided on when and how the recipients would be determined.
“We’ve been fighting for nearly three years to secure long-term relief for the hundreds of thousands of small, independently owned restaurants and bars that are waiting for help,” Erika Polmar, executive director of the Independent Restaurant Coalition said in a statement. “The SBA has the opportunity to help save millions of jobs and small businesses by swiftly taking action and distributing the remaining EIDL and RRF funds.”
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