VASBDC Access to Capital Advisor: “The number of SBA loan and/or grant programs continues to shrink with the summer heat. PPP and RRF are no longer available and SVOG closes Friday night. This leaves the COVID EIDL and attendant Targeted and Supplemental Advances as the sole remaining programs available. The former is a loan program designed to provide long-term working capital with a current maximum of $500,000, while the latter 2 are grants ($10,000 and $5,000 respectively).
The decrease in available funding programs comes at a critical time for many small businesses that are beginning to feel the impact of the Delta COVID variant on their fragile recovery. A recent survey found that fully 35% of small businesses were unable to pay their rent on time in July.
If you are struggling financially and need working capital to stabilize your operations the most viable option is the COVID EIDL. To date, the SBA has approved over 3.81 million loans for about $244 billion. It should be noted that since the transition to the Office of Capital Access, approvals have increased markedly, up fully $8B in just one week.
The Targeted Advance (along with the Supplemental Advance) are the only true federal grant funding sources available currently. To date, the SBA has awarded 331,341 advances for approximately $2.78B, which is only a small portion of the $30B designated by Congress. The likely reason for the low disbursement rate is the requirement that the business be in a low-income area as determined by an agency mapping tool.
If clients are considering applying for the EIDL and/or the Targeted/Supplemental advances they should be encouraged to do so ASAP for several reasons, including:
- These programs expire on 12/31/21
- The recent infrastructure legislation will transfer funds from the program to help cover the cost of the program
- Efforts to re-fund the RRF have also targeted transferring funds from the EIDL
- The impact of the Delta variant has disrupted the financial recovery of many small businesses
Finally, it should be noted that the SBA is working diligently to make the program much more user-friendly. They have worked thru an application backlog of over 600,000 pending requests, and they have also made the application process much simpler than in the past. In addition, they have expanded their call center staff and have begun to provide district office personnel with access to application tracking software. The net effect should be a much smoother process for applicants. Also, if you have applied and been declined, you should not re-apply but apply for reconsideration using the instructions provided in your decline letter.”