SBA gives COVID-19 disaster loan borrowers more time to repay
Businesses and nonprofits that took out federal COVID-19 disaster loans will have more time before they must begin making payments, the U.S. Small Business Administration announced on Tuesday.
Holders of the COVID-19 Economic Injury Disaster Loans will get an additional six-month to one-year deferment, depending on when their loan was granted.
The additional time to repay the loans came in response to a request from Sen. Chuck Schumer (D-N.Y.), who wrote to the SBA last weekend. The letter, which was first reported by Newsday, was signed by 15 other Senate Democrats.
An earlier deferment of loan payments was set to expire this month.
Schumer, the Senate majority leader, said he asked for more time for borrowers because their recovery has been slowed by the omicron variant and inflation.
SBA Administrator Isabella Casillas Guzman agreed, saying on Tuesday, "This extended principal and interest deferment will provide financial relief to millions of small business owners, particularly those hardest hit by the pandemic and related marketplace challenges."
Schumer thanked Guzman for "putting our hardest-hit businesses in the best position to fully recover."
Now, "Long Islanders and beyond can breathe a sigh of relief knowing they will not have to take another hit to their bottom line with new loan payments amid ongoing global supply disruptions and economic uncertainty," he told Newsday.
The new deferment brings to 30 months the amount of time that COVID EIDL borrowers have until they must begin making loan payments. The deferment affects loans made to businesses and nonprofits in 2020, last year and this year due to the coronavirus.
In New York State, Long Island secured the second-most COVID EIDL loans among the 10 regions: $6.1 billion to 55,718 businesses and nonprofits.
The loans are from the U.S. Treasury and have a term of up to 30 years and interest rates of 3.75% for businesses and 2.75% for nonprofits. Interest continues to accrue during the deferment period.
Marlene Cintron, administrator of SBA’s Region II, which includes New York, said on Tuesday the new deferment "will give the smallest of small businesses more flexibility in recovering and returning to their pre-COVID strength…[They] will be able to use capital obtained through sales to grow their businesses when it matters most."
Unlike past deferments, Tuesday's decision doesn't include EIDL loans granted for Superstorm Sandy and other natural disasters. The total number of active EIDL loans of all types in New York State is more than 313,000, according to SBA.
Matt Cohen, president and CEO of the Long Island Association business group, said, "With historic fuel prices compounding already high inflation, it's welcome news that small businesses have more time to start COVID-19 EIDL repayments as they continue to navigate economic uncertainty."