Four Million Hard-Hit Businesses Approved for Nearly $390 Billion in COVID Economic Injury Disaster Loans
SBA delivered an unprecedented level of economic aid to small businesses impacted by the pandemic
WASHINGTON, DC – As the country continues to transition from a historic economic recovery to stable, steady growth that works for families and small businesses, Administrator Isabella Casillas Guzman, the voice for America’s 32.5 million small businesses in President Biden’s Cabinet, highlighted the impact of the SBA’s COVID Economic Injury Disaster Loan (EIDL). Through the life of the program, the SBA disbursed approximately $390 billion to nearly four million small businesses and nonprofits.
Taken together with the American Rescue Plan-funded programs – the Restaurant Revitalization Fund, the Shuttered Venue Operators Grant, the COVID EIDL Targeted and Supplemental Advance Grants, and the Paycheck Protection Program — COVID EIDL, which was often used for critical business operations such as making payroll, has helped small businesses power historic economic growth. In the first three quarters of 2021, small businesses with fewer than 50 employees created 1.9 million jobs, the fastest nine-month start in any year on record. This historic level of investment in saving our small business economy has resulted in high marks of trust in the SBA among the American public.
“The SBA has delivered historic economic relief to millions of America’s small businesses through the COVID Economic Injury Disaster Loan program,” said Administrator Guzman. “President Biden believes we can deliver government services and ensure critical relief gets into the hands of those who need it the most with equity, speed, and certainty. We delivered on his vision by revamping the COVID EIDL program to expand the delivery of low-interest, flexible loans to meet the continued needs of small businesses for financial relief so they could recover. At the same time, we enhanced anti-fraud measures to protect taxpayer dollars and ensure that funds benefited those Congress intended to help. Nearly 90 percent of loans went to small businesses with 10 employees or less, which tend to include the hardest-hit and most underserved populations. The hardworking team members of the SBA and the Biden-Harris Administration will continue to use every tool at their disposal to support small business owners.”
Several small business leaders and members of Congress applauded Administrator Guzman and the Agency’s stewardship of the program. In addition, small business owners that received crucial funding to stay afloat shared their testimonials.
See below for what they’re saying:
Lois Gamerman, COVID EIDL recipient, President and CEO of Soft Stuff Distributors, Inc. in Jessup, Maryland: “Without the great programs and great people of the U.S. Small Business Administration, I might not be in business today. As a specialty foodservice distributor, my company suffered along with every other hospitality and travel-centric business. We lost 85 percent of our business when the country shut down as a response to the pandemic. We furloughed a majority of our 48 employees. With COVID EIDL, we were able to put staff back on payroll, pay down debt, and expand. We now have 52 employees and are on pace to exceed pre-pandemic revenues by 46 percent.”
Willie C. Johnson, COVID EIDL recipient, Owner of WCJ Consultants, LLC, in Baton Rouge, Louisiana: “The pandemic significantly impacted my woman-owned small business. But, because of the funds I received from the SBA’s COVID EIDL, I was able to cover expenses for payroll and rent to help bridge the financial gap from one contract to another to keep my business open as we work to recover from the impact of COVID. In general, it is extremely difficult to find alternative funding sources to COVID EIDL.”
U.S. House Small Business Committee Chairwoman Nydia M. Velázquez (New York-7): “The COVID EIDL program supplied hundreds of billions of dollars in relief to millions of struggling businesses during their time of need. The program, and the tireless efforts of SBA staff to administer it, saved the livelihoods of countless entrepreneurs and helped pave the way for the rapid recovery of our economy. During the Biden Administration, I’ve been proud to work with Administrator Guzman and other leaders at SBA to make substantial improvements to COVID EIDL. I believe that our efforts made the program more secure against fraud, efficient in its operations, and effective in delivering aid to the small businesses that need it. Moving forward, we must continue our rigorous oversight to safeguard the program from fraud and ensure that taxpayer funds are protected.”
U.S. Senator Jacky Rosen (Nevada): “The economic challenges brought on by the pandemic were devastating for our nation’s small business community and they have been felt particularly hard in Nevada, where 99 percent of businesses are small businesses. I fought to ensure that the U.S. Small Business Administration raised the caps on EIDL loans, providing greater relief to thousands of businesses across my state and making this critical program even more effective at helping small business owners get through COVID.”
U.S. Senator Raphael Warnock (Georgia): “The tenacity of Georgia’s small businesses keeps our state’s economy strong. During the pandemic, Economic Injury Disaster Loans were a lifeline for many Georgia small businesses, offering almost $14 billion in financing within the state to help to keep doors open and Georgians working. I was proud to successfully push to extend the deferment period that will provide additional flexibility for nearly 200,000 Georgia small businesses to repay these loans. I’ll continue advocating on the federal level to ensure Washington is doing all it can to keep our Georgia small businesses moving forward.”
Oklahoma City Mayor David Holt: “When COVID hit, we feared we might descend into a long-term recession or worse. But the federal assistance administered by the SBA has ultimately helped Oklahoma City recover stronger than ever. In Oklahoma City, we recently set a record for the lowest unemployment on record, while setting new records for sales tax revenues. Our economy is booming, and that growth ensures our residents have jobs and our government can provide the services people depend on. None of that would have happened without the timely support of these programs.”
Clarence E. Anthony, CEO and Executive Director, National League of Cities: “Small businesses are the backbones of our communities. We’re thankful that through the COVID Economic Injury Disaster Loan program, the SBA was able to deliver approximately $390 billion in economic relief to nearly four million small businesses across the country. Importantly, as a result of the direct lending program, hundreds of thousands of small business owners traditionally excluded from the financial system were able to unlock relief capital when they needed it most.”
Helping Hard-Hit Small Businesses Survive and Thrive
Under the Biden-Harris Administration, Administrator Guzman has made it her top priority to deliver relief quickly and equitably, make COVID EIDL more flexible, and streamline the application process. At the same time, the fraud controls introduced under Administrator Guzman’s leadership have ensured the SBA can fight fraud by identifying and mitigating fraud risks.
Under Administrator Guzman’s leadership, the SBA:
- Eliminated an Over One Million Applicant Backlog. Eliminating a one million+ applicant backlog and reducing application processing to an average of two-three weeks which is faster than industry timeframes.
- Instituted Changes to Increase Loan Processing Volumes. Under streamlined processes, the SBA processed $1 billion of relief to 50,000 small business owners per day at peak stages, dwarfing the processing volumes of the world’s largest financial institutions.
- Established a 30-Day Exclusivity Window. To ensure the smallest of businesses had additional time to access these funds, the SBA implemented a 30-day exclusivity window for approving and disbursing funds for loans of $500,000 or less, after the cap was increased to $2 million.
- Increased the COVID EIDL Cap. The SBA lifted the COVID EIDL loan cap to $2 million for eligible applicants. Loan funds can be used for any normal operating expenses and working capital, including payroll, purchasing equipment, and making debt payments.
- Implemented Deferred Payment Periods. To assist small businesses struggling to make ends meet, the SBA established extended deferred payment periods so small business owners will not have to begin COVID EIDL repayment until 30 months after loan origination.
- Expanded Eligible Use of Funds. Recognizing the importance of capital flexibility, the SBA made COVID EIDL funds eligible to prepay commercial debt and for payments on federal business debt.
- Instituted Industry Best Practices to Reduce Fraud. To ensure federal relief dollars reached the small businesses Congress intended to help, the SBA instituted anti-fraud measures, including IRS verified tax returns and checking Treasury’s Do Not Pay List. Staff review of loans flagged for possible fraud has protected taxpayer dollars and led to the referral of suspected fraud to federal law enforcement authorities.
The SBA remains committed to increasing capital for small businesses, including those in underserved communities. Small business owners still seeking assistance can participate in the Community Advantage loan-guarantee program, the 7(a) and 504 loan programs, or connect with their local SBA field office to get connected to an SBA lender that can best meet their capital needs and/or a Community Navigator to get connected to additional small business resources. For additional information on SBA funding opportunities, please visit www.sba.gov/funding-programs.
Article courtesy of the Small Business Administration.