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US small business loans a challenge due to COVID-19

April 20, 2020  - By
Photo: Piotrekswat / iStock / Getty Images Plus / Getty Images

Photo: Piotrekswat / iStock / Getty Images Plus / Getty Images

Small businesses, including many surveyors, are being hit particularly hard by the current economic situation 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

About the Author:


Matteo Luccio possesses 20 years of experience as a writer and editor for GNSS and geospatial technology magazines. He began his career in the industry in 2000, serving as managing editor of GPS World and Galileo’s World, then as editor of Earth Observation Magazine and GIS Monitor. His technical articles have been published in more than 20 professional magazines, including Professional Surveyor Magazine, Apogeo Spatial and xyHt. Luccio holds a master’s degree in political science from MIT. He can be reached at mluccio@gpsworld.com or 541-543-0525.

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