A Newsy investigation finds more than half a million businesses unable to borrow more money from an SBA loan program that has plenty left to give.
PATRICK TERPSTRA: Beer stopped flowing at Atlas Brew Works in Washington when the pandemic hit.
JUSTIN COX: Our business fell by more than half almost overnight.
PATRICK TERPSTRA: Closed during lockdown, then partially reopened with indoor dining restrictions. For his brewery to survive, Justin Cox needed cash, and traditional loans weren't an option.
JUSTIN COX: Banks just stopped making loans, especially to people in kind of the food and beverage industry.
PATRICK TERPSTRA: So he went to the federal government, the Small Business Administration, for what's known as an Economic Injury Disaster Loan. But he was disappointed to learn, unlike other disasters where you could borrow up to $2 million, the SBA last April cut off COVID-19 loans at $150,000. That's all from this program he could get.
JUSTIN COX: Though it certainly was not nearly enough for our business and a lot of other small businesses, but something is better than nothing.
PATRICK TERPSTRA: We found Atlas was not the only business to max out at a $150,000 loan.
Our data team sifted through records from the SBA and discovered 567,000 businesses nationwide were like Atlas, maxing out at that $150,000 loan limit, all unable to borrow a penny more from that lifeline.
- Why has the SBA placed that $150,000 borrowing limit?
PATRICK TERPSTRA: The SBA administrator at the time under President Trump told senators the cap was necessary to fan out loans quickly to as many places as possible.
JOVITA CARRANZA: We had over 5 million applications in the queue.
PATRICK TERPSTRA: Yet now we've confirmed the program is running a massive surplus, $271 billion unspent and not lent. And that was before Congress injected another $15 billion from the new stimulus law.
- Raise your hand.
PATRICK TERPSTRA: The SBA, with a brand new administrator, is currently re-examining the $150,000 loan maximum. A decision on whether to lift the cap has been made, the SBA tells us, with an announcement coming before the end of the month.
JUSTIN COX: This is our brewery.
PATRICK TERPSTRA: Atlas also received funds from the SBA's Paycheck Protection Program but could still use a bigger Disaster Loan.
JUSTIN COX: If the SBA was to expand the program, we absolutely would go back-- back to them.
PATRICK TERPSTRA: Money to buy more aluminum to can his beer and to staff up ahead of what he hopes will be a full reopening--
JUSTIN COX: I'm feeling optimistic, but we're still not there.
PATRICK TERPSTRA: --and recovery. Patrick Terpstra, Newsy, Washington.