Small businesses hoping for emergency relief in the wake of the coronavirus pandemic are once again discovering that the government is much quicker in shutting them down than it is in providing financial assistance.
For businesses affected by COVID-19, an update to the Small Business Administration’s Economic Injury Disaster Loan Program was supposed to provide a lightning-fast lifeline, offering advance grants of up to $10,000 within three days of businesses making a request. The advance, part of the federal government’s $2 trillion economic stimulus package, would not have to be paid back, even if businesses were ultimately turned down for an EIDL loan.
It sounds like a great deal for companies in a cash crunch, but the devil may be in the details. The streamlined application process has been live since early last week, but many business owners say they are still waiting for their advances days after applying, according to a deluge of angry social media posts and Reddit threads. What’s more, the SBA has not made it clear when businesses that applied will receive the much-needed funds.
At least one lawmaker has weighed in on the snafu—Senator Brian Schatz of Hawaii—who said in a statement that “overwhelming interest in the program has slowed the process.” But the SBA has not yet said publicly how long businesses might have to wait in light of the delay.
Another point of contention is the amount of the grant itself. While the program promises advances of “up to $10,000” for businesses, some say they are now being told that the advance amount is contingent upon the number of employees a business has. According to an email bulletin sent Monday by the SBA’s Massachusetts District Office, the advances will be “distributed this week,” and will total “$1,000 per employee” up to $10,000 total. For companies with fewer than 10 employees, that could mean considerably less than they were planning on.
However, the SBA’s main office still hasn’t publicly confirmed that the advances will be scaled down for smaller companies. Spokespeople for the agency have not responded to requests for comment. (Update: On Thursday, a spokesperson finally replied, saying the agency is “awaiting specifics on policy updates from SBA senior leadership.”)
No doubt the SBA is overwhelmed with requests, not just from small businesses with a legitimate claim but perhaps even from opportunists looking for what could be perceived as easy free money. YouTube, for instance, is rife with explainer videos telling people how to cash in. Unfortunately, suffering businesses that need help the most are likely to be the least equipped to get it.
The confusion over grants is the latest example an increasingly chaotic rollout for coronavirus relief promised to small businesses. The separate Paycheck Protection Program, through which businesses were promised $349 billion in the form of forgivable loans, has left many lenders scrambling to comply, with some saying they’re still trying to digest confusing guidance from the federal government. Yesterday, Wells Fargo said it already stopped accepting PPP applications after it reached its capacity.
Are you a small business owner or self-employed individual who is having trouble obtaining relief through the SBA loan programs? I’d love to hear about your experience. Email me at firstname.lastname@example.org.
This story has been updated with a response from SBA. Correction: An earlier version of this story misstated the PPP loan total. It’s $349 billion.