An emergency disaster lending program for small businesses has been so overwhelmed by demand that it has significantly limited the size of loans it issues, while blocking nearly all new applications from small businesses, according to Aaron Gregg and Erica Werner of the Washington Post. (Note: This SBA program, the Economic Injury Disaster Loan program is separate from the new Paycheck Protection Program. See below.)
After initially telling businesses that individual disaster loans could be as high as $2 million, SBA has now imposed a $150,000 limit.
The Economic Injury Disaster Loan program is a long-standing SBA program that’s separate from the new Paycheck Protection Program,
- Congress gave the disaster loan program more than $50 billion in new funding in recent relief bills to offer quick-turnaround loans to businesses slammed by the coronavirus pandemic.
- The agency has faced a backlog of millions of applications for the disaster loan program for the past several weeks.
- The SBA has been so overwhelmed by demand it is now allowing only agricultural interests to submit applications.
- Republican senators had been pushing hard for farmers and agriculture companies to be able to tap the program, and they are now being prioritized over other prospective borrowers.
- Agency officials have said the holdup is because of a lack of funding and an unprecedented crush of applications.
Photo: SBA Administrator Jovita Carranza and Secretary of Treasury Steve Mnuchin on April 2, 2020. (Photo by Win McNamee/Getty Images)