SBA Offers Last Call for a Key Covid-Era Small-Business Aid Program

In the past few days, tens of thousands of small-business owners have received emails from the Small Business Administration inviting them to apply for more money through the Economic Injury Disaster Loan program, an emergency loan program for small businesses struggling financially amid the pandemic.

The SBA is offering the opportunity to request more money before the program runs out, which is estimated to be in the next couple of months. The SBA has not recently given a statement as to how much money is left. The program was first authorized under the Cares Act in March 2020, and has since been replenished by both the Paycheck Protection Program and Healthcare Enhancement Act, passed in April 2020, and the American Rescue Plan Act, which Joe Biden signed into law in March 2021.

The loans, now valued at up to $2 million, were capped at $150,000 and $500,000 at earlier points during the pandemic. They come with low interest rates of 2.75 percent for nonprofits and 3.75 percent for businesses.

Interest in the program has been swift. The SBA’s data shows that as of April 14, 2022, 3.9 million loans have been issued, worth more than $369.1 billion.

Still, there’s money left over that the SBA is trying to dole out, at the last minute, to prove it needed all the funds allocated to it. As I have said before, the SBA is acting like a bunch of corporate workers trying to prove they can use their budget before a calendar year ends. While access to program funds overtly hinges on whether a business can show financial deficits related to the pandemic, in practice, that’s a farce. Companies simply need to apply; there is not even any proof of economic injury required for these programs. It is an embarrassment and puts taxpayers’ money in jeopardy.

If you’ve already applied for the EIDL and received funds, you are still able to request an increase, up to the $2 million, for up to two years after your initial loan closure or when money runs out. New applications for the EIDL program are not being accepted but appeals and reconsiderations submitted before December 31, 2021, or within six months of being declined, will continue to be reviewed.

I remind everyone, who has received an EIDL or is still considering getting an increase, to read the fine print. There are rules about what you can and can’t use the money for. However, many are breezing past those rules with the lure of “fast, cheap cash.” The money is not free, and even though payments on it are deferred, interest is still accruing.

For those who have already taken the funds and used them improperly, beware. More and more stories are coming out about steep fines and even jail time for the worst offenders.

The U.S. Department of Justice now has an audit unit to look for fraud. At the helm is associate deputy attorney general Kevin Chambers. So far, there have been over a billion dollars in EIDL funds seized, criminal charges filed against more than 1,000 defendants, and 240 civil investigations into pandemic loan fraud. While estimates range from $8 billion to $10 billion in losses, many believe that is a conservative estimate.

So what is going to make the DOJ pull your file? This was the DOJ’s official statement, as of March 10, 2022: “Chambers plans to focus on large-scale criminal enterprises and foreign actors who sought to profit at the expense of the American people. This will include establishing strike teams to prepare for the next phase in the Justice Department’s efforts to fight pandemic fraud.”

While that statement may have some breathing a sigh of relief, I would say not so fast. Just days after releasing the above statement, the DOJ talked about filing charges against two businesses that had received Paycheck Protection Program, PPP, loans for $170,000 and $430,000. One was charged under the False Claims Act and the other with fraudulently obtaining PPP loans.

That being said, these are some specific identifiers the DOJ will be looking for:

  1. Six- to seven-figure loan amounts
  2. Forged documents
  3. False certification
  4. Padded worker counts

While this next wave of “Covid-19 relief” may seem simple and easy to get, we all know that is never the case when it comes to the government. If something appears too easy, it probably is.

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