A deadline for COVID-era recovery loans lapsed on Friday, with questions lingering about how much funding is available to help backstop small businesses hunkering down as the Omicron variant surges across the economy.
Small business owners had until Friday to apply for the regular Economic Injury Disaster Loan (EIDL) and the Targeted EIDL Advance program. However, the Small Business Association (SBA) didn’t clarify how much remains in those funds.
A representative told Yahoo Finance the agency will continue to process applications after the December 31st deadline, including reconsiderations, but will not accept new applications after that.
The SBA has made strides in distributing funds to small businesses across the county, following heavy criticism in 2020 when applicants faced long delays, confusing procedures and communication lapses.
Thus far, the SBA has doled out nearly 4 million loans under the program for a total of $316.6 billion as of December 23, according to SBA data. The SBA has also funded over 547,000 Targeted EIDL Advances for about $4.7 billion.
Still, it's unclear how much money remains in funding for all COVID-19 EIDL programs. This week, the Business Journal reported that the agency has $11.8 billion remaining, but a SBA spokesperson could not confirm that number to Yahoo Finance, and declined to provide a specific figure.
Millions of business owners have already received their loans, and they will still be able to request for an increase two years after their loan’s origination date. However, those funds could soon be running out. The bipartisan infrastructure bill passed by Congress in November would pull about $31 billion from the COVID EIDL programs.
Those cuts would come in the form of “rescissions,” a commonly used tool of federal budgeting. This would allow Congress to consider the merits of programs and funding levels, and could result in lawmakers taking back unused funding from an agency or program.
These rescissions may include cutting $13.5 billion from the EIDL and $17. 5 billion from the Targeted EIDL Advance, which offered immediate grants of up to $10,000 in months for owners in low-income areas that were temporarily shuttered because of the pandemic.
The SBA confirmed that Congress originally provided them with $105 billion in total funding for COVID EIDL programs, including Targeted and Supplemental Advance components. Yet it's unclear how the cuts will affect the amount of loans the SBA will be able to dole out; small business owners were able to apply for EIDL loans of more than $500,000, and up to $2 million use the funds to pay down debt.
“The SBA has enough in available funding to continue supporting all EIDL applicants up to their full, entitled amount,” a spokesperson told Yahoo Finance in a statement.
'A bad ride'
Even though COVID-19 EIDL programs are ending, the SBA will continue to support established small business owners and startups through their traditional lending portfolio. The agency’s four-year strategic plan, scheduled to be released early this year, has the SBA still assisting in recovery efforts.
Meanwhile, many small-business owners continue to wait for their funding, and have complained about being trapped in an endless cycle of red tape and unresponsive officials.
“It's just been a bad ride. I don't understand why it's so difficult to do something so simple. They have everything they need,” Michael Hill, an independent contractor in Chicago, Illinois, told Yahoo Finance in an interview.
Hill had no problem getting an EIDL for $18,000 in July of this year– but he finds himself stuck in limbo now on his request for a larger loan.
“I am really struggling right now. It’s made my Christmas completely miserable,” Hill said as he struggles to pay his bills. The 63 year-old is at risk of having his car, which needs a new engine and is his lifeline as an Uber driver, repossessed since he can’t make the payments.
“There's no reason for this. I will essentially lose my business,” an emotional Hill added.
In October, Hill had applied for an increase in funding of about $58,000 through the EIDL, but logistical issues prevented the SBA from verifying his new bank account. Since then, the worker has been trapped in a cycle of calls, emails and document requests — with no relief, even though the SBA has most of his information on file.
In October, GOP Reps. Blaine Luetkemeyer and Patrick McHenry sent a letter to SBA Administrator Isabel Guzman calling out the lack of communication, and how it's hampered small business loan requests. It also prompted Senators John Hickenlooper (D,CO) and James Risch (R, ID) to introduce the bipartisan Streamlining EIDL Act to improve the EIDL application process for small business, and combat fraud.
According to the Idaho Republican, small businesses in his state have struggled to get the answers they need on their EIDL applications from the SBA. The goal of this new legislation is to simplify the process so small businesses can quickly and effectively get answers to their applications.
Among other measures, the legislation would require the SBA to submit a report to Congress detailing steps it has taken to rectify its handling of identity theft cases, and to report how its recovered improper payments.
Still, help could be on the way. Through the newly revamped Build Back Better legislation currently mired in Congress, the SBA could receive billions in funding to bolster existing loans and grants or create a slew of new programs.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv
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