SBA Disaster Loans Capped at $150K, Limited to Agriculture
New restrictions on the Economic Injury Disaster Loan program may prompt real estate professionals to look to other funding programs. Responding to the skyrocketing demand and evaporating funding, the Small Business Administration has reduced the size of loans it will issue through the EIDL program. It’s also reportedly limiting remaining funding to agricultural businesses.
This emergency disaster lending program for small businesses is separate from the Paycheck Protection Program, another lifeline that has been distributing funds to help companies stay afloat during financial hardships faced from the COVID-19 pandemic. Real estate professionals are still reportedly accessing PPP loans.
Initially, the EIDL program was granting individual disaster loans for small businesses of up to $2 million. But now the SBA has begun to limit those loans to $150,000, The Washington Post reports. As the agency works its way through a reported backlog of millions of applications over the last several weeks, it is also limiting who can now apply.
“At this time, only agricultural business applications will be accepted due to limitations in funding availability and the unprecedented submission of applications already received,” a statement on the SBA website reads.
“The SBA observed the necessity to help farmers recover from the economic downturn caused by the pandemic,” Carol Chastang, an SBA spokeswoman, says.
The EIDL has been a longstanding program within the SBA that often is used during times of crisis by companies. As the program became available in response to the pandemic, the SBA reported several million applications in the first few days it was activated. The EIDL program first ran out of funding in April, but Congress allocated an extra $50 billion for the loans.
Meanwhile, the Paycheck Protection Program is still accepting applications from small businesses. The PPP program, focused on keeping small businesses from laying off employees by offering disaster loans through forgivable loans, has $126.5 billion in funding remaining from its $669 billion total, HousingWire reports. Some banks reportedly have stopped accepting PPP loan applications because they believe they have enough in their pipelines to use up the rest of the funding, Cowen Washington Research Group reports. However, lawmakers urge that applicants try a different lender if one lender denies a loan. More than 5,400 lenders are issuing PPP loans.
