The Long Island Association wants Congress to lower the interest rate on disaster loans for small businesses that are struggling to survive the coronavirus pandemic, officials said.
The Melville-based business group sent a letter to New York’s two senators and Long Island’s five members of the House of Representatives requesting the interest rate on Economic Injury Disaster Loans, or EIDL, be reduced from 3.75% to 1% for business borrowers.
The LIA said the interest-rate change should be included in the next stimulus package, which has stalled so far on Capitol Hill
“Since some businesses could not qualify or got rejected for the Paycheck Protection Program, EIDL is their only source of survival,” LIA president Kevin Law said in Wednesday’s letter. “In considering the gravity of this particular disaster, it is imperative to reduce the current interest rate.”
He also said the interest rate for nonprofit borrowers should be cut from 2.75% to 1%. PPP loans have an interest rate of 1%.
“With the business and nonprofit community struggling in this unprecedented crisis, Washington could do more to financially assist our region and help bring back the newly unemployed into the workforce and avoid businesses having to close their doors permanently,” Law said.
The U.S. Small Business Administration runs the EIDL program, which makes loans of up to $2 million. Recipients generally receive an initial advance of up to $10,000, which is forgivable in most instances.
The lower interest rate would apply to 707,613 EIDL loans totaling $55.8 billion as of May 30. New York accounts for 47,877 loans totaling $4 billion, according to SBA.
Borrowers must have 500 or fewer employees and the loan term is 30 years.
SBA stopped taking EIDL applications on April 15 when the program ran out of money. The agency hasn’t reopened the application portal, except for agricultural businesses, despite Congress approving additional funds.
SBA officials said Wednesday they are still reviewing more than 5 million applications submitted in March and April.