Small businesses can get $2 million disaster loans, with more time to pay them back.

0

Small businesses looking for cash to help them weather the pandemic can now borrow up to $2 million from the federal government, after the Biden administration said on Thursday it would lift a cap of $500,000. on disaster relief loans.

Those with smaller economic disaster loans will be able to apply for increases, although the Small Business Administration said it would not begin approving requests over $500,000 until October 8.

All loans taken out this year will also come with a two-year repayment deferral, allowing struggling businesses to catch up on their bills, the agency said. Loans can also now be used to refinance existing debt.

The loan program “offers a lifeline to millions of small businesses that are still affected by the pandemic,” Isabella Casillas Guzman, the agency’s administrator, said in a statement.

So far under the program, the Small Business Administration has issued 3.8 million loans, totaling $263 billion. The amount that small businesses and nonprofits can borrow is based on their income and expenses; they are now eligible for loans equivalent to approximately two years of their operating costs, up to the $2 million limit.

Fearing a flood of borrowers could quickly exhaust the program, Small Business Administration officials quietly limited loan sizes to $150,000 at the start of the pandemic. The cap was raised to $500,000 after President Biden took office.

The low-interest loans, made directly by the government, can be repaid over a period of up to 30 years and can be used for a wide variety of expenses – including, from Thursday, the repayment of higher interest rate debt or other federal loans. loans. Companies had previously been barred from using the money for such refinancing.

The loan program has saved the lives of many business owners, but it has also gotten mired in changing rules, complexity and bottlenecks. In August, the agency said it had dramatically accelerated processing and cleared a backlog of loan increase applications that had grown to more than 600,000.

But the funding remaining in the program could be limited: the $1 trillion infrastructure bill the Senate passed last month seeks to remove some of it for other purposes. The House plans to consider the bill this month.

Share.

Comments are closed.