U.S. Sen John Hickenlooper is asking the Small Business Administration to lift a cap on loans available to small businesses dealing with fiscal challenges due to the COVID-19 pandemic.
With an estimated one in three small businesses facing failure in coming months without financial support, the Colorado Democrat said Thursday in a letter to the SBA that the federal agency can help companies survive by increasing maximum loan amounts to $2 million from a $150,000 cap imposed by the Trump administration.
"All efforts must be made so that small businesses can keep workers on payroll, meet their expenses and survive the coming months as the vaccine reaches more people and we begin to safely reopen the economy,” the Colorado Democrat said in a statement released Friday.
The funds are part of the SBA's Economic Injury Disaster Loans program, which allows qualifying businesses and nonprofits to borrow directly from the agency, potentially helping companies that don't have ready access to lending institutions, Hickenlooper said.
"Strengthening this program will assist sole proprietors and minority and women-owned businesses that were ignored by large financial institutions in other relief efforts," he said.
An entrepreneur who owned numerous brewpubs and restaurants before he was elected mayor of Denver, Hickenlooper sits on the Senate Committee on Small Business and Entrepreneurship.
Through mid-February, the SBA has loaned just over $200 billion to small businesses and nonprofits, with 57,890 loans totaling nearly $3.3 billion in Colorado, according to an SBA report.
The program's 30-year loans carry a 3.75% fixed interest rate for businesses and can be used for working capital and normal operating expenses that could have been met if the pandemic hadn't walloped the economy.
Hickenlooper also asked the SBA to let businesses borrow enough money to cover 12 to 18 months worth of expenses, rather than the current period of two to six months. In addition, he suggested letting businesses wait to begin loan payments until they can get on their feet instead of the current one-year deferment.