Promises Promises
A federal program promised small businesses up to $2 million in loans. Now it's maxing out at $15,000.
A federal disaster loan program offering up to $2 million in relief is now capping out at $15,000 — and is leaving some borrowers wondering if they'll even get that.
The Economic Injury Disaster Loan program, an offshoot of the Small Business Administration's emergency funds system, has faced an unprecedented number of requests amid the COVID-19 pandemic, and is having trouble keeping up and following through with promised loan amounts, The New York Times reports.
Several applicants reportedly said SBA representatives told them funding for the program was running out. Deb Wood-Schade, a chiropractic wellness business owner, told the Times she had been approved for a nearly $25,000 loan, but was given documents on Wednesday telling her the loan had been cut to less than a third of that amount.
As part of the $2 trillion relief bill signed by President Trump last month, applicants to the program were also supposed to be made eligible for a $10,000 advance in the form of a grant that would not have to be repaid, and the money was reportedly supposed to be distributed within three days of applying. According to the Times, that money has yet to be dispensed.
"I'm afraid I won't see a penny," Virginia Warnken Kelsey, an opera singer who applied on March 29, told the Times.
The sudden onslaught of requests caused by the virus has handed the SBA a "historic influx of loan applications," The Washington Post reports, leading to a major applicant backlog. The $10 billion in federal funding provided by the CARES act would cover the $10,000 advances of around one million businesses. But in three days, the program reportedly received more than three million applicants.
Lawmakers in Washington are still negotiating over a bill that would inject more money to small businesses, with Democrats blocking the latest attempt by Senate Majority Leader Mitch McConnell (R-Ky.) and demanding double the amount.