By Thomas W. Tramaglini, BRP Onesta
We recently polled over 1,400 BRP Onesta clients who own one or more small businesses. Of the responses we received, most (84.2%) were thankful of the PPP and EIDL programs, and many (68.3%) said it was not enough.
Perhaps the biggest recent barrier identified has been the expansion of the EIDL loan – on our count, of the 1,487 business owners we received results from, 1,299 said they had requested more funding as per the guidance of the SBA and to date, 97.1% of our clients said they were either declined for more funds, been told they needed to provide more documents, or that their applications have been processing for months. To date, only 2.9% of our clients have received additional EIDL funds.
What was successful?
The PPP program was certainly a move in the right direction –
Since the beginning of the pandemic, small business owners have taken advantage of several programs to help them get through the COVID-19 pandemic. For instance, as of December 20, 2021 there were 11,453,936 applications received by the Small Business Administration (SBA Data Report) for funding under the Paycheck Protection Program (PPP). Of the over 11 million applications, over 79% of the applications were approved amounting to funding of $791,420,024,727. To date, $662,273,930,930 of PPP funds have been forgiven (83.6%) meaning the small business does not have to return the funds which they borrowed. The majority of business owners who we have spoken to say the funds were the right help at the right time. While there were major hiccups in PPP funding along the way, clearly it has made a difference.
However, many small businesses felt that the original first and second draw PPP funds were not enough. Many businesses did not get funded before the money ran out. For instance, our company helped get our clients more than $40MM of PPP funding but we still had over 100 clients who were waiting in the queue within banks or the SBA because of wrong codes, poor loan execution by the fintechs or banks, or some other unforeseen issue. In some cases, our clients had to close their doors because they lacked the capital needed for sustaining their business’.
So, what will 2022 bring? The answer is… Who knows? Last week, the JP Morgan Chase CEO said that the pandemic would end in 2022. Towards the end of 2020 and the earlier this year we anxiously awaited the next round of Stimulus funding, which President Trump signed into law and later President Biden took to funding to the next level with a larger bill (American Rescue Plan).
However, still to date, many small business owners say that it was just not enough.
What other types of funding are available? According to the SBA…
- EIDL loan and Targeted Advance applications will be accepted until December 31 and will continue to be processed after this date until funds are exhausted.
- Supplemental Targeted Advance applications will be accepted until December 31; however, the SBA may be unable to process some Supplemental Targeted Advance applications submitted near the December 31 deadline due to legal requirements. The SBA cannot continue to process Supplemental Targeted Advance applications after December 31 and strongly encourages eligible small businesses to apply by December 10 to ensure adequate processing time.
- Borrowers can request increases up to their maximum eligible loan amount for up to two years after their loan origination date, or until the funds are exhausted, whichever is soonest.
- The SBA will accept and review reconsideration and appeal requests for COVID EIDL applications received on or before December 31 if the reconsideration/appeal is received within the timeframes in the regulation. This means six months from the date of decline for reconsiderations and 30 days from the date of reconsideration decline for appeals – unless funding is no longer available.
What is still available?
“The COVID Economic Injury Disaster Loan (EIDL) and EIDL Advance programs still have billions of dollars available to help small businesses hard hit by the pandemic. More than 3.8 million businesses employing more than 20 million people have found financial relief through SBA’s Economic Injury Disaster Loans,” said Patrick Kelley, Associate Administrator for SBA’s Office of Capital Access. “Key enhancements have been made to the loan program that will help our nation’s businesses recover and get back on track.”
In September, Administrator Guzman announced major enhancements to the COVID Economic Injury Disaster Loan (EIDL) program. Key changes announced included:
- Increased COVID EIDL Cap. The SBA lifted the COVID EIDL cap from $500,000 to $2 million. Loan funds can be used for any normal operating expenses and working capital, including payroll, purchasing equipment, and paying off debt.
- Implementation of a Deferred Payment Period. The SBA will ensure small business owners will not have to begin COVID EIDL repayment until two years after loan origination so that they can get through the pandemic without having to worry about making ends meet.
- Establishment of a 30-Day Exclusivity Window. To ensure Main Street businesses have additional time to access these funds, the SBA implemented a 30-day exclusivity window of approving and disbursing funds for loans of $500,000 or less. Approval and disbursement of loans over $500,000 began after the 30-day period ended.
- Expansion of Eligible Use of Funds. COVID EIDL funds are now eligible to prepay commercial debt and make payments on federal business debt.
- Simplification of affiliation requirements. To ease the COVID EIDL application process for small businesses, the SBA established simplified affiliation requirements to model those of the Restaurant Revitalization Fund.
How to apply
Eligible small businesses, nonprofits, and agricultural businesses in all U.S. states and territories can apply. Visit www.sba.gov/eidl to learn more about eligibility and application requirements. The last day that applications may be received is December 31, 2021. Applications received by December 10 for Supplemental Advance will be processed in the order received and the SBA cannot guarantee processing of all applications by December 31. All applicants should file their applications as soon as possible to allow for processing. For additional information on COVID EIDL and other recovery programs, please visit www.sba.gov/relief.
Small business owners may call SBA’s Customer Service Center 1-833-853-5638 (855-440-4960 for the deaf and hard-of-hearing) or email DisasterCustomerService@sba.gov for additional assistance. The center is open Monday through Friday from 8 a.m. to 8 p.m. EST. Abbreviated hours will be observed during the Thanksgiving holiday (closed on Thanksgiving Day; open Friday, November 26 – Sunday, November 28 from 9 a.m. to 5 p.m. EST). Multilingual representatives are available.
Small business owners may also contact SBA’s Resource Partners by visiting www.sba.gov/local-assistance.