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, The Washington Post reports.
The Economic Injury Disaster Loan program is a longstanding Small Business Administration 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. 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.
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 has been so overwhelmed by demand that it is now allowing only agricultural interests to submit applications as it works through the enormous backlog. 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.
The Economic Injury Disaster Loan program, known as EIDL, is accustomed to dealing with geographically contained disasters such as hurricanes, tornadoes and wildfires. It was part of the federal response to Hurricane Katrina in 2005, Hurricane Sandy in 2012 and the wildfires that swept the West Coast last year. Read the full story.
