On the one hand, SBA is increasing the loan limit for its Economic Harm Catastrophe Loan Program (low-interest loans repaid within 30 years) from US$500,000 to US$2 million. The funds can be used for any operating expenses, including purchasing equipment and repaying debts.
The Small Business Administration on Thursday announced improvements to its disaster loan program in an effort to help more small businesses access financial support from the government as the delta variant of COVID-19 continues business operations nationwide.
SBA said in a statement on Thursday that SBA will also postpone loan repayment within two years after the loan is issued to give small business owners leeway to “survive the pandemic without worrying about making ends meet.”
Within 30 days, SBA will only approve and disburse loan funds of US$500,000 or less to ensure that the smallest business can receive relief funds.
SBA has also simplified the application, approval, and payment process to provide more assistance to businesses. Eligible companies can apply for loans through the SBA website before December 31, 2021. Recipients of Salary Protection Program loans can also apply for EIDL funding.
Today, the SBA processes more than 37,000 applications per day, compared to approximately 2,000 applications the day before the pandemic. According to the government, the work efficiency of loan officers has increased from 1.86 applications per day to 15 applications per day. SBA stated that it has cleared its blacklist of applications and is processing new applications immediately.
“SBA’s COVID Economic Hurt Disaster Loan Program provides a lifeline for millions of small businesses still affected by the pandemic,” SBA administrator Isabella Casillas Guzman said in a statement on Thursday. “We have re-adjusted this key plan-raising the borrowing limit to $2 million, providing a 24-month extension, and expanding the flexibility to allow borrowers to repay higher interest corporate debt.”
Guzman added that the goal of the SBA is to “ensure that every entrepreneur who needs help gets the funds needed for reopening, recovery and reconstruction.”
Difficulty in obtaining capital
Small business owners who are still struggling to obtain funding say they appreciate this move. 44% of small business owners say they have Less than three months of cash reservesAccording to a report by Goldman Sachs, only 31% of small business owners said they were very confident that they could get funding when needed. According to a survey of more than 1,100 small businesses, the situation for black business owners is even worse. The report found that more than 50% of black-owned small businesses had cash on hand for less than three months, and only 20% of black-owned small businesses expressed confidence in their access to funds.
“We are encouraged and gratified to see the Biden administration prioritize funding for small businesses by updating and expanding the COVID-19 Economic Injury Disaster Loan (EIDL) program,” said Jessica Johnson, Chairman of the Voice of Goldman Sachs 10,000 Small Business -Kop said the National Leadership Council and the owner of the Johnson Security Bureau in the Bronx, New York. “This will help small business owners like me to obtain affordable working capital as we continue to face ongoing challenges on the road to recovery. “
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