The federal government’s catastrophe credit fund for small employers has received far less attention than the infamous shortage, but it can be just as dysfunctional.
The Economic Injury Disaster Loan (EIDL) program, which was recently expanded to cover coronavirus-affected companies, offers qualified companies cash advances of up to $ 10,000 for low-interest loans of up to $ 2 million worth over one Period of 30 years can be repaid.
It sounds promising, but small business owners who applied for loans through the US Small Business Administration describe the process as confusing and complain that the money is slow to come.
“We submitted our EIDL application immediately. First, we were told it was $ 10,000. About a month later, on April 23, we found money in our account, but it was nowhere near what we were expecting, “said KB Brown, owner of Wolfpack Promotionals, a printing facility in Minneapolis, Minnesota.
Weeks after his application, Brown said he had received an advance of $ 3,000 on the loan, which was insufficient to cover a month’s business expenses. He doesn’t know if he’s eligible for a major catastrophe loan and finds that he hasn’t received any further information from the SBA.
“Right now we need at least $ 25,000 at the bottom to get caught up, make sure our suppliers get paid, and get people back,” Brown said.
According to the SBA website, the EIDL program is to grant an advance loan within three days of the successful application.
According to a survey by the National Federation of Independent Business, almost all companies applying for EIDL funds applied for the emergency grant to cover them while waiting for their full loans to be processed. The SBA said it processed more than 755,000 loan advances totaling more than $ 3.2 billion and approved nearly 27,000 loans totaling more than $ 5.5 billion.
However, entrepreneurs from across the country informed CBS MoneyWatch that the program had not met their expectations. And, according to the NFIB survey, “most applicants to the EIDL still need an update on the status of their application, and no small business applicants have done so.” [reported to the NFIB they] received the loan or emergency grant. ”
About three quarters of the people interviewed by the NFIB said they were frustrated with the application process, and they agreed that the SBA had no communication.
Bryan Davis, founder of, a direct-to-consumer men’s shirt company, also expected immediate support from the EIDL program after its sales plummeted as the Americans cut spending.
“The business went from perfectly fine to literally less than nothing,” said Davis. “I thought those $ 10,000 would keep the wolves away.”
Instead, Davis waits about three weeks after applying for EIDL money for an answer to his application. “The strange thing is, I didn’t hear anything at all. I wonder if I didn’t fill it out correctly, was there another step I had to take that I didn’t know about or was it caught in the balance?”
Where did my loan go?
Other business owners said they initially received five-digit loan offers that allowed them to find a way forward for their companies – just so that those lifelines would mysteriously disappear after they tried to accept them.
Denise Brown, a controller for, a Seattle, Washington-based chain of ice cream parlors, told CBS MoneyWatch that their company had been offered a $ 500,000 loan through the EIDL program.
“It was really something that would get us through and we felt we had some redemption,” she said of the loan.
The relief was short-lived. “We said we were making a plan to reopen the business the next day to find that the status of the loan was ‘denied’. After we had been approved, there was a zero loan amount, and the SBA hotline said that she couldn’t provide us with any additional information.
Brown is still waiting for an explanation as to why the initial offer of help has suddenly been withdrawn.
“The whole company went on this trip, where we had a plan just to have the rug pulled out from under us,” Brown said. “It is so difficult when there is already so much uncertainty about what the future will look like because there is also this kind of uncertainty about what help we can expect from the government.”
Molly Moon’s Homemade Ice Cream isn’t the only small business whose loan suddenly seems to have disappeared.
Andrew Volk, who together with his wife Briana owns the Portland Hunt and Alpine Club, a bar and restaurant in Portland, Maine, received an EIDL offer on April 14, about a month after applying for the program .
“We logged on to the portal saying that we were approved for a loan that would have allowed us to reopen,” said Volk. “There was a moment when Briana and I looked at each other and said that this could be the solution for us. It could work. It was a great feeling,” he said.
Again, this excitement didn’t last long. Volk accepted the loan only to be notified that the offer had been rejected. “We received the message that we can no longer process your application. You will receive an email with further details.”
A week later, he has not yet received clarification from the SBA, whose customer service representative he describes as “very friendly, but clearly new to the job”.
Volk now feels like it is in first place again. “I am now on hold. There was this movement and now the SBA has no money for EIDLs. I was rejected and there is absolutely no one who can explain why,” he said.
SBA officials did not respond to CBS MoneyWatch’s requests for comments on the EIDL program or complaints from business owners about their experience.
Brown, who owns the printer, said the lack of federal aid meant that he was faced with difficult decisions. His wife has applied to Amazon and is considering selling some of his printing equipment. But even that might not be enough.
“The bills don’t stop, so we have to figure out what we’re going to do. Do we oppose the instructions and continue with the reopening?” Brown said. “I am asthmatic and have lost family members to the virus, but we may have to open up, but because we need the money and get nothing.”