SBA: Funds committed to all eligible borrowers of COVID disaster loans
Patrick Kelley, associate administrator of the U.S. Small Business Administration’s Office of Capital Access, testifies to the House Committee on Small Business on Wednesday, May 18. Credit: James T. Madore
The federal government has committed funds to every small business and nonprofit that submitted a qualifying application for the COVID-19 disaster loan program by this month’s deadline, even though the money ran out on the same day, the U.S. Small Business Administration told Newsday.
SBA has or will distribute funding to all eligible borrowers in its COVID-19 Economic Injury Disaster Loan program if their request was received by 11:59 p.m. on May 6 and since has been approved. Congress doesn’t need to approve additional money.
“All eligible COVID EIDL applications that were filed and met the May 6 deadline have had funds obligated to them,” the agency said, responding to a request for more information after an SBA official testified before Congress.
Patrick Kelley, who oversees the COVID EIDL program as head of SBA’s Office of Capital Access, told the House Committee on Small Business last week that “there were about 61,000 workable [loan applications] at the close of business on May 6.”
He continued, “All of those workable files … that are eligible for funding did in fact get approved for funding and have funds obligated 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 spokesman didn’t provide the breakdown, Newsday filed a request for the data under the Freedom of Information Act. The request is pending.
The SBA spokesman did confirm that the 61,000 applications include 9,000 requests for reconsideration of applications that were turned down previously.
Many of the reconsideration requests were not successful. “Eight out of 10 times that someone seeks reconsideration, they’re denied,” Kelley said, responding to questions from Rep. Andrew Garbarino (R-Sayville), a committee member.
Rep. Andrew Garbarino (R-Sayville) speaks during a meeting of the House Committee on Small Business on Wednesday, May 18. Credit: James T. Madore
An undisclosed number of the applications received by the May 6 deadline were from borrowers seeking additional COVID EIDL loan funds.
Borrowers who received loans in 2020 and early 2021 were permitted to seek additional funding because their loans had been made under regulations set by then-President Donald Trump's administration that reduced the maximum loan amount from $2 million per applicant to $150,000. President Joe Biden's administration restored the larger loan amount after Congress authorized more money last year.
Kelley said the 3.6 million COVID EIDL loans made in 2020, or 93% of the total, didn’t require that the borrower’s income be verified using federal income tax returns. Income verification was instituted by Biden last year and used in making 300,000 loans.
Kelley said when the 2020 borrowers sought more money, "50% of the time they were denied the increase" because the income verification process showed they were ineligible for additional funding.
More than 3.9 million COVID EIDL loans, totaling $378.4 billion, have been made nationwide since the coronavirus struck more than two years ago. In New York State, there are 339,354 loans, totaling $37.6 billion, the second-most in the country after California, according to SBA data as of April 28.
The loans come with a term of up to 30 years and an interest rate of 3.75% for businesses and 2.75% for nonprofits.
Correction: All eligible requests for funding from the COVID-19 Economic Injury Disaster Loan program have or will be fulfilled if received by the May 6 deadline, the SBA said. An earlier version of this story published May 19 said some requests wouldn’t be fulfilled.
James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.
