In a new letter, Senator Reverend Warnock and 15 of his colleagues urged SBA Administrator Guzman to extend the Economic Injury Disaster Loans (EIDL) repayment deferment period
This will help provide immediate relief to the close to 190,000 Georgia small businesses that currently have an EIDL
Senator Reverend Warnock: “I am deeply committed to making sure that Washington is doing all they can to help keep Georgia’s economy strong and support small businesses that help give life to all of our communities”
Senator Reverend Warnock is a fierce advocate for Georgia’s small businesses, introducing legislation to protect them from security breaches, securing federal investments to provide relief to small businesses as they navigate COVID-19, and championing the expand Child Tax Credit – which provided families with much needed relief to spend at small businesses
Washington, D.C. – Today, U.S. Senator Reverend Raphael Warnock (D-GA) led a group of his colleagues in urging U.S. Small Business Administration Administrator Isabel Guzman to extend the Economic Injury Disaster Loans (EIDL) repayment deferment period for small businesses in Georgia and across the nation.
“I am deeply committed to making sure that Washington is doing all they can to help keep Georgia’s economy strong and support small businesses that help give life to all of our communities,” said Senator Reverend Warnock upon sending the new letter. “That’s why I am urging the SBA to swiftly extend the Economic Injury Disaster Loans (EIDL) repayment deferment period, which will help provide immediate relief and peace of mind to nearly 190,000 small businesses across our state.”
SBA EIDLs are low-interest loans available to eligible small businesses. EIDLs provide eligible small businesses a loan up to $2 million, with a repayment term of up to 30 years. The loans can be used to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses. COVID-19-related EIDLs have an interest rate of 3.75% for businesses and 2.75% for nonprofits and initially had an automatic one-year deferment on repayment, but on March 16, 2021, the SBA announced that they would extend the deferment period for a second year.
“While there are many hopeful signs that the economy is improving, most small businesses are not yet in a position to benefit from the recovery due to their smaller profit margins, more limited inventories, lack of access to capital, and struggles to compete with larger corporate competitors for employees and supplies, particularly as we work to address supply chain delays,” wrote the lawmakers. “The enterprises that turned to the Small Business Administration (SBA) during the pandemic include some of the most vulnerable businesses in our nation. Granting them additional time before having to pay back their loans would not only provide much-needed relief during this period of continued uncertainty, increased costs, and supply chain challenges, but also put them in a much better position to thrive once the economy is fully recovered,” continued the lawmakers.
“When Congress funded the COVID EIDL program in 2020, it did so to ensure that small businesses would have access to the capital they needed to weather this pandemic and to ultimately come out of it stronger. After two turbulent years, we know the end is in sight, but small enterprises still need help. Congress has given you the authority to provide relief, and we ask that you recognize the continued uncertainty and struggles small businesses face today and use it now,” the lawmakers concluded.
Nearly 190,000 Georgian small businesses have benefitted from EIDL loans. Extending the deferment acknowledges that these small businesses are operating in a perilous economic environment, due not only to the continuing health threat, but to large scale changes that had greatly altered our economy during the pandemic. With their slim profit margins, small businesses find it challenging to support debt even in the best of times. The letter was also signed by: Senators Catherine Cortez Masto (D-NV), Mark Kelly (D-AZ), Ben Cardin (D-MD), Maria Cantwell (D-WA), Jacky Rosen (D-NV), Michael Bennet (D-CO), John Hickenlooper (D-CO), Jeanne Shaheen (D-NH), Maggie Hassan (D-NH), Chuck Schumer (D-NY), Cory Booker (D-NJ), Mazie Hirono (D-HI), Ed Markey (D-MA), Tammy Duckworth (D-IL), and Chris Coons (D-DE).
Read the full letter below:
Dear Administrator Guzman:
We write today in support of the nearly four million Economic Injury Disaster Loan (EIDL) small business borrowers that continue to struggle due to the COVID pandemic and ask that you use your administrative authority to extend the deferment period for the EIDL program to help small businesses across the country thrive as our economy continues to recover.
While there are many hopeful signs that the economy is improving, most small businesses are not yet in a position to benefit from the recovery due to their smaller profit margins, more limited inventories, lack of access to capital, and struggles to compete with larger corporate competitors for employees and supplies, particularly as we work to address supply chain delays. The enterprises that turned to the Small Business Administration (SBA) during the pandemic include some of the most vulnerable businesses in our nation. Granting them additional time before having to pay back their loans would not only provide much-needed relief during this period of continued uncertainty, increased costs, and supply chain challenges, but also put them in a much better position to thrive once the economy is fully recovered.
Upon your confirmation last spring, we were encouraged by your immediate decision to extend the deferral period for the EIDL program from 12 to 24 months. This decisive use of your authority was an acknowledgment that the operating environment for small businesses remained perilous, due not only to the continuing health threat, but to large scale changes that had greatly altered our economy during the pandemic. With their slim profit margins, small businesses find it challenging to support debt even in the best of times. Your decision to extend the EIDL deferment period provided immediately relief and was warmly welcomed by businesses trying to get their bearings after a year spent fighting to survive, and it helped many small businesses, including close to 190,000 Georgian small businesses, stay afloat.
Unfortunately, since the beginning of your tenure at SBA, additional COVID-19 variants forced businesses to contend with even greater uncertainty, leaving them unable to prepare for what comes next. For the average small business, the past year has presented a series of impossible decisions: do they invest their limited capital to prepare for customers that may not be able to come through the door or do they risk being unable to meet demand and suffer damage to their hard-earned reputations? Do they hire workers to serve clientele that may not materialize or accept the possibility of being understaffed and overwhelmed? Do they proceed in anticipation of a return to normal or do they permanently adapt their business model? No small business can answer these questions with certainty right now, and yet they are unavoidable, forcing small business owners to make crucial decisions that will ultimately determine the viability of their enterprises. These are also decisions that put tremendous pressures on a small business’s balance sheet.
You have the authority to reduce at least some of the uncertainty businesses are facing with regard to their EIDL loans. As you did last year, we encourage you to recognize that these borrowers still need relief and to use the SBA’s statutory authority to provide additional breathing room for small businesses whose loan payments will soon become due. For vulnerable small businesses trying to navigate crisis after crisis, the knowledge that debt service will not be a short-term concern is invaluable. Extending the deferment period will allow them to make long-term planning decisions without the looming prospect of loan repayments hanging over their heads.
When Congress funded the COVID EIDL program in 2020, it did so to ensure that small businesses would have access to the capital they needed to weather this pandemic and to ultimately come out of it stronger. After two turbulent years, we know the end is in sight, but small enterprises still need help. Congress has given you the authority to provide relief, and we ask that you recognize the continued uncertainty and struggles small businesses face today and use it now.
Sincerely,
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