SBA Updates Small-Business Disaster Loan Program

The Small Business Administration (SBA) announced new improvements on its disaster-assistance loans on Thursday, September 9. The SBA’s loans are a form of official federal aid for businesses suffering economic difficulties caused by COVID-19.  This batch of updates to the program was driven by the Delta variant of COVID-19 jeopardizing business operations across the US.

The improvements apply to the Economic Injury Disaster Loan program only, and they allow higher loan limits and repayment terms over 30 years for loans between $500,000 and $2 million. The SBA will not impose any limits on how the money can be used, but its primary purpose is covering operating expenses, paying debts, or buying new equipment.

Another benefit guaranteed by the SBA is that business owners will get a two-year repayment-free period once they receive the loan funds. That way, the pandemic will hopefully be over by the time struggling entrepreneurs have to worry about repayments.

The SBA plans to approve and distribute money for loans below $500,000 in the next 30 days, ensuring straightforward access to the economic injury funds to the smallest businesses. In addition to this, the SBA enabled easier loan applications and faster loan approval and distribution. Small businesses eligible for loans can apply for the disaster loan program through the SBA site until the end of December 2021.

“The SBA's COVID Economic Injury Disaster Loan program offers a lifeline to millions of small businesses who are still being impacted by the pandemic [...] We've retooled this critical program — increasing the borrowing limit to $2 million, offering 24 months of deferment, and expanding flexibility to allow borrowers to pay down higher-interest business debt,” said Isabella Casillas Guzman, the SBA Administrator.

Many small-business owners are struggling to get funds, according to the latest research. Only 31% of small business owners believe they will get federal funds if they need them, while 44% claim they have less than three months’ worth of cash in reserve. The situation is direst for Black business owners - more than half of them said they have less than three months in cash reserves, while only 20% think they can access federal support if needed.