The Washington Post: SBA Slashes Disaster-Loan Limit, Shuts Out Nearly All New Applicants

The Paycheck Protection Program isn’t the only Small Business Administration-backed relief program for small businesses affected by the coronavirus pandemic, and unfortunately, it’s not the only one struggling desperately under the weight of incoming applications.

According to The Washington Post, the Economic Injury Disaster Loan program, an SBA program established before the COVID-19 outbreak and designed to provide loans for small businesses recovering from disasters, has slashed its funding limit from $2 million to $150,000 and closed its portal to nearly all new applicants.

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. But by many accounts, it is failing spectacularly. After initially telling businesses that individual disaster loans could be as high as $2 million, SBA has now imposed a $150,000 limit without publicly announcing the change, said people familiar with the situation who were not authorized to speak publicly.

Additionally, the agency has faced a backlog of millions of applications for the disaster loan program for the past several weeks, several SBA officials have said.

The SBA is still accepting EIDL applications from agricultural interests, but all other businesses will have to look elsewhere as the program processes its backlog. According to The Post, “Key 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.”

Read the full article at washingtonpost.com.