SBA’s COVID-19 Emergency Funds Exhausted, Congress Negotiates Additional Funding

The Small Business Administration’s (SBA) Economic Injury Disaster Loan (EIDL) program and the Paycheck Protection Program (PPP), both intended to get money swiftly to small businesses seeking emergency relief from the economic impact of the COVID-19 outbreak, have run out of funds. The SBA announced yesterday, that it is temporarily suspending new applications for both until Congress appropriates additional funding. The SBA said loan applications already filed will be processed on a first come first serve basis. 

The SBA is instructing small businesses that Enhanced Debt Relief is available in agency’s other business loan programs to help small businesses overcome the challenges created by this health crisis. For information on traditional SBA lending options, please click here.

Last month, Congress appropriated $349 billion in funding for the PPP and $10 billion for the EIDL program. While the PPP payouts have been processed relatively quickly through third party lenders, the EIDL emergency loan program, administered directly by the SBA is experiencing lengthy delays due to the sheer volume of applications and lack of administrative resources to process them. The SBA allocated $7.3 billion to EIDL but has received $372 billion in emergency relief applications from small businesses seeking $10,000 grants for immediate expenses and up to $2 million in emergency low interest loans. Congress included a provision in the CARES Act requiring completion of processing and payout of the $10,000 emergency grants within three days of receiving applications. However, many applicants are still waiting for their SBA money three weeks after filling. 

Meanwhile, an effort to provide an additional $250 billion for the PPP stalled this week over whether hospitals, food assistance and state and local governments should also receive extra funding. Furthermore, about 100 members of Congress signed a letter yesterday to SBA Administrator Jovita Carranza saying that they would strongly back a request for more funding. Lawmakers have been in recess to avoid further spread of the virus through large groups and are not expected to return until May 4th. Fortunately, Congress can approve a new COVID-19 response bill before May 4th through unanimous consent meaning that no lawmaker objects to the bill. Given that there is strong bipartisan support for the PPP, a breakthrough in negotiations is likely. 

PMAA and the Small Business Legislative Council (PMAA) sent a letter today to House and Senate leadership urging them to approve additional PPP funding immediately. Click here to read the letter.