Key Highlights
- The SBA not accepting new applications for Economic Injury Disaster Loan assistance program
- Applications already submitted to be processed on first come-first served basis
The Small Business Administration, the umbrella under which both the Economic Injury Disaster Loan (EIDL) assistance program and the Paycheck Protection Program (PPP) are being administered, is overwhelmed by the crush of demand from applicants.
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In a statement by a spokesperson for the SBA, Matt Coleman said, “The SBA is unable to accept new applications at this time for COVID-19 Economic Injury Disaster Loan- related assistance…based upon available appropriations funding.”
Coleman clarified that applicants who have already submitted applications to the EIDL program will be processed on a first-come, first-served basis.
The EIDL, initially funded for an allocation of $17B, ran out of funding on April 16 and was then re-authorized for an additional $60B April 22. This loan program is able to offer up to $2M per applicant via the US Treasury Department with an interest rate of 3.75% over a 30-year term to assist small businesses damaged by a “natural disaster.” The SBA stopped taking new applications after receiving more than 5M applications.
The Payroll Protection Program under the SBA re-opened its doors with an additional $310B after running out of its initial $349B after just 13 days. Again, the SBA was completely overwhelmed by processioning more than 10,000 PPP loans submitted by 4,000 lenders in just 5 hours. (The SBA’s website crashed within 20 minutes of first operating and was down for the balance of the day.)
Lenders that were processing these loans could not submit all their applications to the SBA system for processing and approvals as the SBA notified lenders on the day before “opening” that it was limiting the number of applications that could be submitted at any given time.
Jovita Carranza, the administrator of the SBA, tweeted, “There are double the number of users accessing the system compared to any previous day during the first round of PPP funding.”
Needless to say, small businesses needing the financial lifelines being dangled in front of them via the EIDL and PP programs are more overwhelmed than the lenders or the SBA or Ms. Carranza.
Thanks to Newday’s James T. Madore.
Also read: Outlook: Economy, Loans, Unemployment and Housing Market, Podcast: Will Housing Boom When States Reopen?, America to Struggle More with Economic Disparities After COVID-19 Subsides
