After receiving over 3 million applications as the coronavirus pandemic continues, an emergency loan program helmed by the Small Business Association (SBA) is running low on funds.
The Emergency Injury Disaster Loan program, run separately from the SBA, gets funding from the government usually for things like tornadoes or other disasters. But with the pandemic, Congress felt it necessary to provide some funds for the program as part of the $2 trillion CARES act.
The EIDL received $10 billion in funds to distribute in the form of $10,000 loans to businesses in need, which would be distributed within three days of applying for a loan. The loans were intended to serve as a holdover until larger ones could come through.
However, none of that has been going to plan due to the overwhelmed system — many applicants still don’t have funds weeks later.
Brett Barry, a Phoenix-based former realtor, said he’d received a $1,000 grant from the EIDL on Tuesday, April 14, after applying in late March. That, he noted, was well past the three-day threshold for the program’s stated intent.
That seems to be true for a great number of small business owners. A hair salon owner with locations in Iowa and Nebraska said he hadn’t received any funds after weeks of waiting. A Los Angeles-based bicycle shop owner, with no funds from EIDL as of April 15, is negotiating with his landlord about how to handle rent for the near future.
And because of the shortage of funds compared to the number of applicants, the size of the loans could end up smaller than anticipated.
Lawmakers from both parties said in a letter on April 10 that the SBA was at fault for not distributing the grants in the way Congress intended — waiting weeks to get the money out rather than the three days that were originally mandated.
Maryland Sen. Ben Cardin said the SBA was “overwhelmed” because it only had $7.3 billion to deal with loan requests for around $372 billion worth of applicants. The SBA, Cardin said, didn’t know what to do.
The sheer number of loans has had strains on the SBA as a whole, as well, which is running out of funds after en masse requests.