Small businesses will be eligible for $500,000 loans through the...

Small businesses will be eligible for $500,000 loans through the U.S. Small Business Administration's Economic Injury Disaster Loan program, or EIDL, effective April 6; above, Main Street in Bay Shore. Credit: Danielle Silverman

Federal disaster loans to help small businesses, nonprofits and farms survive the coronavirus pandemic are being increased to a maximum of $500,000 per applicant from the current $150,000, officials said Wednesday.

The change to the U.S. Small Business Administration’s Economic Injury Disaster Loan program, or EIDL, is effective April 6, said the agency’s new administrator, Isabella Casillas Guzman.

Existing borrowers will be contacted by SBA with information about applying for additional funds, she said.

Nearly a year ago, SBA quietly reduced the maximum loan amount from $2 million to $150,000 to make the funds go further. In April 2020, the agency had received more than 5 million EIDL applications in a couple of weeks, sources told Newsday at the time.

The $150,000 maximum loan amount was criticized by Democrats in the U.S. Senate, led by New York’s Chuck Schumer, because the law establishing EID stipulates the $2 million maximum.

Guzman said on Wednesday, "The pandemic has lasted longer than expected and [borrowers] need larger loans. Many have called on SBA to remove the $150,000 cap. … I’m proud to more than triple the amount of funding [that borrowers] can access," she said.

EIDL loans come with an interest rate of 3.75% for small businesses and farms and 2.75% for nonprofits. The term is up to 30 years and the loans cannot be forgiven.

More information is available at nwsdy.li/bigEIDL.

Before a Senate committee on Wednesday, SBA disaster assistance chief James Rivera said, "We still have over $270 billion in remaining loan authority for the COVID-19 EIDL program."

He also said SBA has approved more than 3.7 million EIDL loans for COVID relief, totaling more than $202 billion as of March 18. In New York, the number of loans tops 313,000, totaling $18 billion.

"These emergency loans have gone to the smallest businesses, with nearly 90% awarded to businesses with 10 or fewer employees," Rivera testified before the Senate’s small business committee. "Over this past year, the agency approved and disbursed three times as many EIDL loans for COVID-19 as we have in the past 68 years for all disaster loans in all other disasters combined."

Earlier, the agency announced a deferment of all EIDL repayments until next year.