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Small businesses, including many surveyors, are being hit particularly hard by the current economic crisis caused by the measures required to fight the COVID-19 pandemic because most of them do not have large cash reserves.
The CARES Act, signed into law on March 27, contains $349 billion to keep small businesses afloat. The funds are administered by the Small Business Administration (SBA) through participating banks.
Hundreds of thousands of borrowers have been approved for, or received, aid under the so-called Paycheck Protection Program, meant to give small businesses loans that would be forgiven if they were used to pay employees, rent, or mortgage principal. The program is one of four that the SBA is administering as part of the CARES Act.
The other three are the Economic Injury Disaster Loan (EIDL) loan advance, which will provide up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties; the SBA Express Bridge Loans, which enables small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly; and the SBA Debt Relief, which provides a financial reprieve to small businesses during the pandemic.
These programs — an unprecedented challenge for the SBA, which is already struggling with a surge in coronavirus-related loan applications through other programs such as its disaster loan program — were marred by technical and logistical glitches from the start.
On April 16, while many small-business owners were desperately trying to apply for loans, the SBA ran out of the relief money. Its website’s COVID-19 page announced: “SBA is unable to accept new applications at this time for the Paycheck Protection Program or the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding. EIDL applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.”
As of press time, Congress and the White House are negotiating the possible release of additional rescue funds.
Sources
- Coronavirus (COVID-19): Small Business Guidance & Loan Resources
- Emily Flitter, “Loan Money Runs Out While Small-Business Owners Wait in Line: Frustrated with the process and banks, they have to figure out how to stay afloat while Congress tries to come up with more funding.” The New York Times, 2020.04.16
- Reuters, “Senior Administration Official Says Reports Small Business Loan System Crashed Are ‘Not Accurate’”, The New York Times, 2020.04.06
- Kenneth P. Vogeland David McCabe, “Administration Turns to Private Firms to Help Process Small Business Aid: The Small Business Administration is hiring companies, some with political connections, to ensure it can handle the flood of applications for help in the wake of the economy’s stall.” The New York Times, 2020.04.03