SYRACUSE, N.Y. — Throughout the COVID-19 pandemic, the U.S. Small Business Administration (SBA) made more than $390 billion worth of direct working-capital loans to more than 3.9 million small businesses. In the Central New York region alone, 5,638 loans totaling over $580.25 million were approved. Now, these COVID Economic Injury Disaster Loans (EIDL) are beginning […]
SYRACUSE, N.Y. — Throughout the COVID-19 pandemic, the U.S. Small Business Administration (SBA) made more than $390 billion worth of direct working-capital loans to more than 3.9 million small businesses. In the Central New York region alone, 5,638 loans totaling over $580.25 million were approved.
Now, these COVID Economic Injury Disaster Loans (EIDL) are beginning to come due as the 30-month deferment period ends for businesses. The date is based on the date a business took out the EIDL, which means businesses that received loans early in the pandemic are now facing their first payments.
With that in mind, the Syracuse SBA office recently held a webinar to help borrowers get ready for those payments.
“The vast majority of the dollars and numbers of loans went to truly small businesses,” Daniel Rickman, the SBA’s deputy district director for the Syracuse district, says. About 90 percent of businesses that received EIDLs have 10 employees or fewer.
That doesn’t change the fact that it is a loan and must be repaid. “The SBA does not have the authority to forgive COVID economic injury disaster loans,” he says.
The loans are 30-year, simple-interest loans repaid on a monthly basis, Rickman notes, Businesses that opted not to make any payments during the deferment will have a balloon payment at the end of loan.
The SBA does not enforce any penalty for pre-payment. “There’s nothing to prevent you from accelerating your payments,” Rickman says.
And just like any other loan, defaults are reported and can prevent a business from receiving future government assistance.
Borrowers will receive a payment notice in the mail in advance of the first payment due date, Rickman says. Businesses can and should create an account on the SBA’s Capital Access Financial System (CAFS) where they can access loan information and see their payment date. Payments can be made online at pay.gov, and businesses can set up recurring payments, he said.
Businesses that can’t find or access their loan information can request it from the SBA service center in Birmingham, which covers New York state. The service center can also assist borrowers with other issues concerning their loan including address changes, payoff inquiries, lien-subordination requests, and assumption or change of ownership requests.
That last one is a big one, Rickman notes, because the SBA has an interest in the business until the EIDL is paid. That means the SBA has to approve any change of ownership before it happens, he said.
Borrowers can also reach out to the SBA, if they are not financially able to begin their EIDL payments, to request six months of reduced payments. The payments must be at least 10 percent of the monthly payment total, with a $25 minimum, and businesses can enroll online 60 days before the first payment is due. Borrowers with loans totaling more than $200,000 must contact the service center to enroll.
“This is an option for folks who might face hardship in the short term,” Rickman says. The most-recent information, including any hardship programs, is available at sba.gov/eidl.
Ultimately, businesses will need to figure out how to repay the loans, and the SBA can assist through a variety of resources that can help firms manage their cash flow.
Those free resources locally include the Small Business Development Centers located at Onondaga Community College, Mohawk Valley Community College, and Binghamton University; SCORE mentors; the WISE Women’s Business Center in Syracuse; and the Veteran Business Outreach Center in Watervliet.