Companies harmed by the coronavirus pandemic can soon borrow up to $500,000 through the Small Business Administration’s emergency lending program, raising a cap that has frustrated many applicants.
“The pandemic has lasted longer than expected,” Isabella Casillas Guzman, the agency’s administrator, said on Wednesday. “We are here to help our small businesses, and that is why I’m proud to more than triple the amount of funding they can access.”
The change to the Economic Injury Disaster Loan program — known as EIDL and pronounced as idle — will take effect the week of April 6. Those who have already received loans but might now qualify for more money will be contacted and offered the opportunity to apply for an increase, the agency said.
The Small Business Administration has approved $200 billion in disaster loans to 3.8 million borrowers since the program began last year. Unlike the forgivable loans made through the larger and higher-profile Paycheck Protection Program, the disaster loans must be paid back. But they carry a low interest rate and a long repayment term.
Normally, the decades-old disaster program makes loans of up to $2 million, and in the early days of the pandemic, the agency gave some applicants as much as $900,000. But it soon capped loans at $150,000 because it feared exhausting the available funding. That limit — which the agency did not tell borrowers about for months — angered applicants who needed more capital to keep their struggling ventures alive.
The agency has $270 billion left to lend through the coronavirus program, James Rivera, the head of the agency’s Office of Disaster Assistance, told senators at a hearing on Wednesday.