New Support for Small Businesses Impacted by COVID-19
The President’s plan will help more than 150,000 small businesses by strengthening the COVID Economic Injury Disaster Loan (EIDL) program, which provides long-term, low-cost loans. The improvements will allow more business to get greater and more flexible support from the $150 billion in loanable funds still available in the program. First, the Small Business Administration (SBA) will increase the maximum amount of funding a small business can borrow through this program from $500,000 to $2 million, which can be used to hire and retain employees, purchase inventory and equipment, and pay off higher-interest debt. This increase will help small businesses: an SBA analysis of current COVID EIDL borrowers who qualify for the increase shows that more than 80% have 25 employees or less. SBA will ensure that no small business has to start repaying these loans until two years after they receive the funding, so small businesses can get through the pandemic without having to worry about making payments. Next, SBA will make it easier for small businesses with multiple locations in hard-hit sectors like restaurants, hotels, and gyms to access these loans. To ensure that taxpayer dollars are used to support businesses that truly need help, SBA has implemented tightened controls and will collaborate closely with the SBA Inspector General to monitor the program. And lastly, to ensure that Main Street businesses have additional time to access remaining funds, SBA will offer a 30-day exclusive window of access where only small businesses seeking loans of $500,000 or less will receive awards after the new improved loan product launches.
Streamlining the Paycheck Protection Program (PPP) Loan Forgiveness Process
Through the PPP, the SBA has made more than 11 million loans to small businesses that can be forgiven and taken off of their books if they use the funds to keep employees on payroll. In order to receive forgiveness, borrowers have to complete an application with their PPP lender. The President’s plan will make it easier for more than 3.5 million PPP borrowers with loans of $150,000 or less to get their loans wiped clean. Under the new streamlined approach, SBA sends a pre-completed application form to the borrower who can review, sign, and send back to SBA, which then works with the lender to complete the forgiveness process. Since launching this new process on August 4th, more than 820,000 small businesses have applied for forgiveness, with borrowers spending an average of 6 minutes on the application and 60% of applicants completing the process on their mobile phone. SBA expects more than 2.5 million additional small businesses to take advantage of this streamlined process in the months ahead, helping them avoid needless bureaucracy and avoid costly principal and interest payments on their loans.
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