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| © Provided by Yahoo! Finance Economic Injury Disaster Loan EIDL and handwritten word covid-19. |
By Dani Romero, Yahoo! Finance
Time is running out for businesses to get COVID-19 assistance from the Small Business Administration (SBA), as the rise of a new variant injects more uncertainty into the economic recovery.
The Economic Injury Disaster Loan program (EIDL) was created to provide financial assistance for small businesses to meet financial obligations and operating expenses affected by the pandemic. It targets establishments still reeling from the outbreak — especially hard-hit sectors like restaurants, gyms and hotels.
As of November 18, about $300 billion in loans and grants has been approved by the agency, however, there’s more money available.
Via EIDL, the SBA still has "billions more in relief available to businesses who continue to face uncertainty and challenges," SBA Administrator Isabella Guzman, told Yahoo Finance this week. Last week, the SBA updated EIDL guidance regarding applications for loans, advances, and appeal requests.
The program was "overhauled to improve processing so that we can turn around those funds to small businesses who need affordable, patient capital, up to $2 million. Those programs are available through the end of the year and we want to make sure as many small businesses access those, plus the grants if you're in a low-income area,” she added.
The program is set to expire on December 31st; however, the SBA is encouraging businesses in low-income areas to apply for the Targeted Advance grant of $10,000 through the end of the year, and then the final Supplemental Targeted Advance grant for $5,000, Guzman said.
“Those grants, unfortunately, need to be processed by the end of the year so if you think you might be eligible for that, you need to apply by December 10th,” Guzman added. In contrast, EIDL and Targeted Advance applications received by the end of the year will continue to be processed after that date until all funds have been exhausted.
“If your business needs that type of financing to carry through, make sure that you apply as soon as possible for those funds,” Guzman said.
'It is a mess'
The SBA will accept and review reconsideration and appeals requests received on or before December 31st — if those requests are received within six months from the date of decline, and 30 days from the date of reconsideration decline for appeals, and provided funding is still available.
The agency has touted billions of dollars still available in COVID-19 relief. Yet like other SBA recovery programs with lofty intentions and high demand, business owners have found it hard to navigate the process to get the help they need.
“It is a mess. They never have a specific answer for us,” Christian Friese, co-owner of Dynamic Promotions Inc. — a business that sells accessories that go on the back of smartphones in Georgia — told Yahoo! Finance in an interview.
Friese was approved for the EIDL program back in October, but the process to get there was a “journey. It's been a very difficult process, but it shouldn't have been,” Friese said.
“Once we got approved and had gone through all the red tape, jumped through all their hoops and they [even] made exceptions for us [but] now they're backtracking,” the entrepreneur added.
In the beginning of the pandemic, the CARES Act allowed the Small Business Administration to approve emergency disaster loans without tax records, as a means to not delay getting the financial help to struggling businesses. But the SBA is now verifying that information again, with the IRS still grappling with a backlog of millions.
On that basis, Friese said the SBA relaxed that requirement — but he continues to wait for funding as his application portal shows “active error," with no way to resolve it.
“I call customer service on a daily basis. Everyone is like ‘oh, just wait to hear back.’ Just wait and we've been waiting for months now and nobody's giving us a real answer on what they really need from us,” Hanna Romaih, Friese’s wife and co-owner of Dynamic Promotions, said in an interview.
Meanwhile, thousands of other business owners have shared similar stories via the online platform, Reddit. However, the SBA stated it has ironed out kinks from earlier in the summer, and is now processing thousands of applications daily.
"the SBA has increased its EIDL processing capacity to 37,000 applications daily, a 22-fold increase. The SBA has a demonstrated turnaround time of about two weeks on most EIDL applications, provided the business owner responds promptly to additional information requests,” a spokesperson told Yahoo in a statement.
Additionally, “depending on the specific issues, if they're still in process and had to make modifications and that is still underway, then they can continue with that,” according to Guzman, who added applicants can tap a network of over 1,000 resource partners around the U.S.
“Those centers help businesses get capital ready, get market ready, and with strategies to really help you compete,” she added.
GOP chimes in
Meanwhile, two Republicans on the U.S. House Small Business Committee took aim at the SBA’s ability to make loans directly. With nearly $2 trillion in the recently passed Build Back Better (BBB) Act, the stakes could be high for small businesses.
Missouri Republican Blaine Luetkemeyer, ranking member of the House Small Business Committee, and Arkansas' French Hill said in a letter to Guzman that her agency should focus on its traditional lending programs.
“The SBA should focus on improving its existing programs and incentivizing financial institutions to participate as lenders, instead of expanding its own footprint,” the lawmakers stated in the letter, blasting the agency's "inability to effectively operate a direct lending program over its lifetime."
In the letter, the lawmakers also cited the SBA's Inspector General “serious concerns of potential fraud in the Economic Injury Disaster Loan and Advance grant programs” from 2020 reports. Still, the agency defended its track record and its lending criteria.
“The SBA already has a proven track record of direct lending success through our emergency disaster loan programs. Gaps in accessing capital for the smallest and most underserved communities continue to exist, however, and direct lending will continue to be a tool to lower the barriers of entry to opportunity and the resources needed to thrive," an SBA spokesperson told Yahoo Finance in a statement.
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