Schumer calls on SBA to postpone repayment of COVID-19 loans
Senate Majority Leader Chuck Schumer is asking the U.S. Small Business Administration to defer payments of pandemic-related EIDL loans. Credit: CQ-Roll Call, Inc. via Getty Images / Tom Williams
Sen. Chuck Schumer, citing the struggles of small businesses on Long Island, wants to give holders of federal COVID-19 disaster loans more time before they must begin making payments. The U.S. Small Business Administration said on Monday that it is "actively considering" the request.
In a letter to the SBA last weekend, Schumer (D-N.Y.) wrote that an earlier deferment of payments for COVID-19 Economic Injury Disaster Loans is ending this month. He said borrowers need additional time because their recovery was hindered by the omicron variant and now inflation.
The letter was signed by 15 other Senate Democrats.
In New York State, Long Island secured the second-most COVID EIDL loans among the 10 regions: $6.1 billion to 55,718 businesses and nonprofits.
The loans are from the U.S. Treasury and have a term of up to 30 years and interest rates of 3.75% for businesses and 2.75% for nonprofits.
Schumer, the Senate majority leader, told Newsday that EIDL loans serve as "a lifeline" for borrowers "struggling to stay afloat during these turbulent times. However, with loans starting to come due next month, and many small businesses — from local restaurants to Mom-and-Pop stores and well as nonprofits — still feeling the impact of the recent omicron wave and rising costs from supply-chain disruptions, so many … are still not financially prepared to shoulder the burden of this looming cost," he said.
Schumer made the request for an additional deferment to SBA Administrator Isabella Casillas Guzman, who can act unilaterally.
An SBA spokesman on Monday confirmed receipt of Schumer’s letter, saying, "The widespread support in the Senate for this proposal is a sign of the great extent to which small businesses are relying upon COVID EIDL to dig out of the pandemic. Administrator Guzman welcomes the input and support from the Senate and is actively considering this idea," the spokesman said.
A year ago, Guzman postponed repayment of all EIDL loans, including those granted for COVID, Superstorm Sandy and other cataclysmic events, for an additional year because of the coronavirus-induced recession in 2020.
Among borrowers with older loans, the decision only applied to those who weren’t late in making payments. For holders of COVID EIDL loans made in 2020, the deadline for their first payment was extended from one year to two years from the date of the note. For loans made last year, the first payment was extended from one year to 18 months from the date of the note.
Interest continues to accrue on the EIDL loans during the deferment period. Schumer’s request only covers COVID EIDL loans.
The total number of active EIDL loans in New York State is more than 313,000, according to SBA.
James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.
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