The federal government has committed funds to every small business and nonprofit that submitted an eligible application for the COVID-19 disaster loan program by this month’s deadline, even though the money is s sold out the same day, the US Small Business Administration told Newsday.
The SBA has distributed or will distribute funds to all eligible borrowers under its COVID-19 Economic Disaster Loan Program if their application was received by 11:59 p.m. on May 6 and has since been approved. Congress does not need to approve additional funds.
“All eligible COVID EIDL applications that were filed and met the May 6 deadline had funds committed to them,” the agency said, responding to a request for additional information after an official of the SBA testified before Congress.
Patrick Kelley, who oversees the COVID EIDL program as head of the SBA’s Office of Access to Capital, told the House Small Business Committee last week that “there were approximately 61,000 [loan applications] at the close of business on May 6.
He continued, “All of these workable cases… that are eligible for funding have in fact been approved for funding and have funds committed as of Monday, May 16.”
Kelley did not give a breakdown of how many of the 61,000 applications were approved or denied. When an SBA spokesperson did not provide the breakdown, Newsday filed a Freedom of Information Act data request. The request is pending.
The SBA spokesperson confirmed that the 61,000 applications included 9,000 requests for reconsideration of applications that had been previously denied.
Many reconsideration requests have been unsuccessful. “Eight times out of 10 someone asks for reconsideration, they’re denied,” Kelley said, answering questions from committee member Rep. Andrew Garbarino (R-Sayville).
An undisclosed number of applications received by the May 6 deadline were from borrowers seeking additional funds for the COVID EIDL loan.
Borrowers who received loans in 2020 and early 2021 were allowed to apply for additional funding because their loans were made under regulations set by then-President Donald Trump’s administration that reduced the maximum loan amount of $2 million per applicant to $150,000. President Joe Biden’s administration reinstated the highest loan amount after Congress authorized more money last year.
Kelley said the 3.6 million COVID EIDL loans issued in 2020, or 93% of the total, did not require the borrower’s income to be verified using federal tax returns. Income verification was instituted by Biden last year and used to make 300,000 loans.
Kelley said when 2020 borrowers asked for more money, “50% of the time they were denied the increase” because the income verification process showed they weren’t eligible for the increase. additional funding.
More than 3.9 million COVID EIDL loans, totaling $378.4 billion, have been issued nationwide since the coronavirus hit more than two years ago. In New York state, there are 339,354 loans, totaling $37.6 billion, the second largest in the nation after California, according to SBA data as of April 28.
The loans have a term of up to 30 years and an interest rate of 3.75% for businesses and 2.75% for non-profit organizations.
Correction: All eligible requests for funding from the COVID-19 Economic Disaster Loan Program have been or will be satisfied if received by the May 6 deadline, the SBA said. An earlier version of this story published on May 19 indicated that some demands would not be met.