Federal payday loans are now a must for millions of small businesses

RALEIGH, NC (WTVD) — Millions of small businesses have to budget for a new monthly budget in January.

Repayment of federal loans issued during the pandemic is set to begin.

Nearly 4 million small businesses and nonprofits across the country received billions in government loans during the pandemic. The money was given by the Federal Covid-19 Economic Injury Crisis Loans or the EIDL program. The program provided emergency funds in the form of low-interest loans. The maximum loan granted was $2 million and the average loan approved was $100,000. The first payments were postponed for 30 months but, as of January 1, the period has ended for 1.6 million businesses that are now supposed to start paying debts.

The wages come at a time when many businesses have not recovered and are still facing challenges including labor shortages, inflation, and economic growth.

“The EIDL loan is a 30-year letter, and the interest rate is low, but as you know, borrowing a large amount of money. The fact is that there is a mortgage in your business and It’s difficult,” said Andrew Ullom, the manager of the Union Specialty Bread in Raleigh. Ullom took a PPP loan and decided not to take an EIDL with the aim of trying to avoid more debt in uncertain times. He said he understands how making repayments can be difficult as many businesses continue to struggle with the economic crisis.

“I think personally, we’re going to be five years into the pandemic before we start running a lot,” Ullom said.

The SBA offers accommodation plans for any business that has an EIDL loan to pay but is still experiencing financial difficulties.

They will allow businesses to make 10% of the regular monthly payment but will still accrue interest.

Copyright © 2023 WTVD-TV. All Rights Reserved.

Leave a Comment