Emergency grant program for small businesses is out of money

• The EIDL Advance program, created by the CARES Act, offered up to $10,000 in emergency grants to small businesses.
• It ended Saturday after reaching its funding limit, issuing $20 billion to nearly 6 million businesses.
• The program's end comes as businesses exhaust other coronavirus relief, like Paycheck Protection Program loans, and some states are reimposing business closures.

Foot traffic is slowly returning to Brattle Street and Harvard Square in Cambridge, Massachusetts, but local small businesses are still suffering from the extended coronavirus lockdown.

Lane Turner/The Boston Globe via Getty Images

A pot of money meant to help prop up small businesses during the coronavirus pandemic has run out of funds.

The Economic Injury Disaster Loan Advance program, a federal measure offering grants of up to $10,000 to entrepreneurs, has ended after reaching the $20 billion funding limit allowed by Congress, the Small Business Administration announced Saturday.

Lawmakers envisioned the program, an enhancement to the existing Economic Injury Disaster Loan program, as a way to get fast cash to struggling entrepreneurs.

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The end of the grant program, which was among the government's core responses to help businesses during the Covid-19 crisis, comes as other sources of relief for entrepreneurs are also drying up.

Some businesses are being forced to shut for a second time as cities and states try to rein in regional flare-ups of the coronavirus.

EIDL loans

The EIDL Advance program, created by the CARES Act, gave emergency grants to small businesses within three days of their application being filed.

The grants don't have to be repaid, even if an application for an EIDL loan — which offers up to $150,000 in funding — was ultimately denied.

However, the grants were plagued by long delays and changing rules that frustrated entrepreneurs.

It took some business owners several weeks to get what was meant to be fast cash. The SBA also capped the amount of funding at $1,000 per employee, diverging from the CARES Act's original intent of paying any sum requested by a business owner up to $10,000.

Nearly 6 million businesses received funding through the EIDL Advance program, according to the SBA.

Relief running out

However, businesses are still struggling and many have already exhausted other sources of aid.

The Paycheck Protection Program, also created by the CARES Act, offers small businesses low-interest loans that convert into grants if funds primarily go toward payroll costs, among other parameters.

However, more than half — 56% — of PPP borrowers have spent their loan funding, and the remaining 44% are likely not far behind, according to a recent survey by the National Federation of Independent Business, a trade group.

Businesses that received a loan can't apply for a second round of funding, absent additional intervention from lawmakers. Businesses that haven't yet gotten a PPP loan can apply through Aug. 8.  

Yet many small businesses are still struggling. Of those that applied for a PPP loan, a disaster loan or both, 46% expect to need additional financial support over the next 12 months, according to the federation.

Some states, including California, Nevada and Texas, and cities like Atlanta have reimposed some business closures to contain rising coronavirus infections.