COVID-19: Under 5% of Loans Have Been Disbursed

Regardless of your politics, it’s clear our government is failing us

The CARES act approved $2 trillion to mitigate the economic impact of COVID-19, including $377 billion designated for small businesses. As I wrote a couple weeks ago, tutors can possibly receive relief in the form of an Economic Injury Disaster Loan (EIDL) including up to a $10,000 grant, and through the Paycheck Protection Program (PPP) that provides forgivable loans as long as you spend the money on payroll and don’t reduce headcount.

Both those programs are still available, but experts believe the funds will all be accounted for this week. So if you think you might qualify, I encourage you to apply today. Just be aware that it might be a while….

COVID Loan Tracker reports that a tiny fraction of small businesses have received the loans they applied for.

COVID Loan Tracker was started by 2 small business owners who “have been frustrated by the disconnect between what political leaders are saying in the press, and the reality of the lack of money received from the applications submitted.”

Well, the data is pretty shocking:

• 1.5% of small businesses have received the EIDL grants they applied for
• 4% of small businesses have received the PPP loans they applied for
• Out of over $2.8 billion in loan applications that they’ve tracked so far, only $79 million has been disbursed so far, less than 3%.

What’s the most frustrating to me is the delay in getting EIDL grants out the door. The PPP is a new program introduced by CARES, but EIDL’s have been around for many years. The infrastructure has been in place and there’s simply no excuse for such a long delay for so many businesses. The bill promised that EIDL grants would be distributed within 3 days of the request, even if the applicant is subsequently denied an EIDL.

Well, COVID Loan Tracker shows that the average payment speed for the 1.5% that have received their EIDL grants is currently at 14 days. Considering 98.5% of businesses still haven’t received their grants, that number is going to balloon. And unfortunately, no one will be held accountable.

EIDL applicants got an email Monday informing them that the grant amount has changed to $1,000 per employee

Yes, you read that correctly. The SBA has let applicants know that the terms of the loan have changed after they applied for it.

To be fair, the CARES act language had always specified that the EIDL grant will be up to $10,000. But still: if the amount is going to be capped at $1,000 per employee, the government needed to make that clear on the loan application.

I’m sure there are plenty of sole proprietors who would not have applied for the loan at all had they known their grant amount would be capped at $1,000 instead of $10,000! Our government approved an unprecedented $2 trillion in emergency funding and now can’t even figure out the right way to actually get it into people’s hands.

Contact your senators and representatives and demand they take action to save small businesses

Even if you haven’t been devastated by COVID-19 shutdown yourself, the small businesses in our communities have. I’m extremely worried that the local shops and restaurants that make my neighborhood special will simply never reopen after the dust settles.

Please, take 10 minutes to contact your elected officials and ask them to take whatever action they can to speed up the release of CARES act funds.