U.S. House Committee Holds Hearing on the EIDL

The U.S. House Committee on Small Business convened a hearing entitled, “The Economic Injury Disaster Loan Program: Status Update from the Administration.” Per the hearing notice from the committee, Mr. Rivera is responsible for the implementation of the Economic Injury Disaster Loan (EIDL) program, and the hearing will explore the challenges U.S. Small Business Administration (SBA) has faced in ramping up the EIDL program to deal with the coronavirus pandemic (COVID-19), what steps SBA must take to better meet the needs of small businesses adversely impacted by COVID-19, and what policy changes Congress could make to improve delivery of the program.

Throughout questioning, frustrated members on both sides of the aisle reiterated the amount of calls they have received from constituents regarding uncertainty and questions about their EIDL applications, processes, denied applications, and their loans were not as much as they had anticipated. A main point of contention was the arbitrary cap of the EIDL from the $2 million to $150k. Mr. Rivera did acknowledge that due to the SBA halting processing of loans three times, lack of funds, changes to the Coronavirus Aid Relief and Economic Security (CARES) Act, lack of visibility into the application que, the volume of applications, and lack of staff played into the agency’s decision for capping the loan. Aside from the confusion and frustration regarding the agencies decision to cap the loans, Mr. Rivera did concede the that there could have been more transparency on behalf of the SBA with small business owners, and at the time they felt that they had been transparent in their communications.

Members also asked questions about the changes in size of the EIDL Advance, which was intended to be an injection of fast cash for small business owners of up to $10k but was reduced to $1,000 per employee due to the SBA attempting to maximize the amount of small businesses that they were trying to provide relief too. The reduction in the EIDL advance went against the intention of Congress when the advance was initially established in the CARES Act. The committee hearing memo states that, “permitted borrowers to receive up to $10,000 in advance, without regard to the number of employees at such business. The program was designed to quickly distribute working capital funds to small businesses and to supplement the Paycheck Protection Program (PPP), which was conceived of as a payroll support program.”

As the SBA has been tasked with the responsibility of rolling out and implementing an unprecedented amount of loans and relief during the COVID-19 pandemic, the EIDL and PPP have faced obstacles in the past months that lawmakers in both chambers have held hearings on to provide oversight and how to improve these programs going forward. Congressman Kevin Hern (R-OK) requested from Mr. Rivera that by the end of the third quarter, the SBA assemble a best practice “playbook that would identify things you should do better, who you should communicate to…and things that are going to make [the EIDL] work when [a pandemic] happens again.” Mr. Rivera committed to that by September 30, 2020.

Witnesses:

• James Rivera, Associate Administrator, Office of Disaster Assistance, Small Business Administration, Washington, DC

To view the hearing in its entirety, click here.