Did the Math: EIDL has funding for ONLY 7.3% of Applications.

by abhspire

According to the SBA as of April 24, per Biz Journals (link below) “The SBA has provided 38,984 loans nationally for a total of $7,967,174,888”.

This is an average loan value of $204,370 per loan approved; assuming they are truly processing applications in the order received, then this average amount should be the average representative amount of the future loans to be issued by the additional $50B in funding provided for loans under the Enhancement.

With the second appropriate of $50B for loans and the original $10B from the CARES Act, then $60B is available to be lent out. With an average loan value of $204,370, then the total funds appropriate for the loans (separate from the advances) would only only support 293,584 loans.

The same article mentions that “Nationally, the SBA has processed 1,192,519 advances.” Assuming the the number of processed advances represents the number of applicants (though a separate CNBC article [link below] states that the the SBA has received 4 Million applications), then the SBA only has funds to extend loans to 24.6% of the those who have received an advance.

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These figures would lend credence to the rumors that the maximum loan amount has been reduced to $150k; not knowing the statistics behind the loan amounts issued that resulted in that average number above, it is difficult to say how many additional applicants could be accommodated by this reduction in maximum loan amount, if true. Again, if true, the effect may be material given that the original maximum loan amount available was up to $2M.

Regardless of the legitimacy of this rumored cap, the limited amount of data made public by the SBA would imply that the EIDL program is still massively underfunded. As coy, uninformed, or misleading as Tier 1 and Tier 2 agents seem to have been, whether or not they stick to the script, the massive communication and information gaps are not surprising if the SBA knows that they only have funds fewer than 8% of applications ($60B available / $817B estimated need [see below]).

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Assuming that there are in fact 4 million applicants, as reported by the SBA, and that the average loan amount issued has been just over $204k, again as reported by the SBA, then the program will require $817,481,519,323 (that’s $817B or close to one trillion dollars), which is 13.6x the amount appropriated to the program.

Please point out any flaws in this analysis; hopefully, I have erred here somewhere and the situation is not nearly problematic as this math implies. Perhaps a loan cap, if accurate, despite being as objectionable to people as the change from a $10k grant to “up to” based on $1k/employee (which definitely is occurring) will make some funds available for far more people; however, the math does not seem to have many positive implications.

  1. www.bizjournals.com/atlanta/news/2020/05/05/sba-loan-update-georgia-eidl.html
  2. www.cnbc.com/2020/04/21/small-businesses-seeking-loans-may-have-had-personal-data-exposed.html