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  • Writer's pictureAmi Kassar

AmiSight 10/13: SBA Approving $2 Million EIDL Loans Like a Bunch of Drunken Sailors

I am not surprised to report that the SBA has begun to approve and fund the larger EIDL loans up to $2 Million. I do not have beef with the idea of issuing these loans up to $2M to borrowers who the Pandemic has badly impacted. These businesses need the money to recover and survive. However, I am concerned about issuing these loans now for companies that have survived and thrived during the Pandemic.

Over the last few days, I have met and spoken with borrowers who had their most profitable year in the history of their companies last year and are now having large EIDL loans wired into their accounts. These loans are not a surprise, as the SBA does not require any proof of economic injury to get these loans.

It feels that the SBA Administration is acting like a corporate department rushing to spend their budget in the last quarter of the year because they don't want to look bad that they didn't spend it. This activity should not happen in corporations, and it should especially not occur in our government.

Borrowers who take EIDL loans should pay close attention to the rules about what they are allowed to use the money for. Ultimately, a percentage of borrowers will be audited, and you don't want to find yourself on the wrong end of that stick.

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Oct 13, 2021

First off I agree with you Ami and others who warn plus recommend caution. In my personal professional experience many of what are called small business "benefits" have been used by companies on the larger end of the scale. The 80/20 rule applies in many ways to the market of 500 and under employees. My company is so small as to never qualify for anything ever. Thanks to the plans made available via the SBA we have been able to correct our business and recover. Again I do not disagree yet I will not accept our use of these benefits as wrong. In closing I will share that what you share helps my business Ami because you see the big…


Rebecca Schultz
Rebecca Schultz
Oct 13, 2021

I'll take Ami's advice one step further. When future non-disaster loans go into underwriting, lenders will be looking at that large disaster loan and see the misalignment between the disaster statement and performance. This could come across as poor character from the management/leadership team of the company. It takes future loan conversations down a dark path that I wouldn't want anyone to tread. Until you've been in those credit committee meetings and see how a deal can be picked apart, you don't fully understand how taking disaster money when you don't need it can hurt you.

Disaster loans are for disaster recovery. Growth loans are for growth. It's simple. Please don't take fast and easy money because you can.

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