News broke on Friday afternoon that despite the SBA’s promise of loan sizes reaching $2 million, the agency is capping its Economic Injury Disaster Loans at a maximum of $15,000. Startlingly, according to a New York Times article, the decreased cap will even apply to loans that the agency already approved.
On the bright side, the $15,000 cap does not include the $10,000 advance that should be payable within three days. However, clearly, many businesses will need more funding to continue their operations. That raises an important question: What can you do to make sure your business gets the money it needs? Several options are at your disposal, and you should take all of them.
First, call your federal representatives, both Arizona’s U.S. Senators and the U.S. Representative for your Congressional district. Congress will likely debate appropriating additional funding to the program, due to the undisputed and pressing need for it. Indeed, at least one Senator has already raised the alarm. In response the New York Times article referenced above, Senator Ben Cardin (D-MD) offered the following comment: “The fact that S.B.A. is limiting Economic Injury Disaster Loans to an initial disbursement of $15,000 shows that there is a clear need for more resources for this program.” Flooding the phone-lines of Senators and Congressional Senators will help them focus on the importance of funding this program in light of other competing priorities.
Additionally, you should closely analyze your need for working capital and assess how long $25,000—the combined amount of the loan and advance—will last you. Moreover, we have heard whispers that S.B.A. may further limit loans to $1,000 per employee, going up to the $15,000 cap. (This limitation appears not to apply to the $10,000 cash advance.) These complexities suggest that speaking with an accountant and attorney will help you decide if it is in your interest to apply now, as soon as possible, or hold out hope for additional funding down the road.
At Rose Law Group, we have a team of qualified attorneys who have reviewed the CARES Act and worked with local businesses to secure emergency relief in the face of the COVID-19 crisis. Please feel free to contact us with any questions about this important, breaking news.