Dive Brief:

• The U.S. Small Business Administration has quadrupled the Economic Injury Disaster Loan (EIDL) cap to $2 million from its current $500,000 limit.
• Businesses that have already received an EIDL loan can apply again to increase their loan to the new maximum for which they're eligible. The funds can be used to pre-pay any form of business debt, giving restaurants more flexibility than the previous loan terms, which required payment only for necessary expenses. Businesses have until Dec. 31, 2021 to apply.
• The SBA said in August it intends to clear a backlog of more than 600,000 EIDL increase requests. This could help partially bridge a federal aid gap for restaurants, whose demand for RRF grants far exceeded the program's $28.6 billion funding pot.

Dive Insight:

The EIDL's expanded loan cap could provide a lifeline for struggling restaurants that didn't receive RRF grants. Restaurants applied for $72 billion in RRF grants, but budget constraints left $45.4 billion in requests unfilled.

The NRA said it worked with the SBA to ensure EIDL changes were useful and easy for restaurants to access. It also targeted the EIDL program because government-backed loans carry lower interest rates and are longer term than commercial bank loans or credit lines, which could help cash-strapped operators stay afloat. As of Aug. 19, the SBA has approved about $259 billion for 3.8 million EIDL loans.

The timing of this EIDL cap expansion is good news for restaurants, as the COVID-19 delta variant negatively impacts restaurant traffic. Six in 10 U.S. adults report they have changed their restaurant habits due to the variant, according to an NRA survey. Forty-five percent of restaurant owners also said they were unable to pay rent in August, which is up by 5% compared to July.

"At a time when there is still an extreme need for small business restaurant to access working capital, these changes will improve the outlook for thousands of operators and will lift the economic outlook for communities small and large," Sean Kennedy, NRA's executive vice president of public policy, said in a statement emailed to Restaurant Dive.

It's possible additional aid could soon be on the way, since a bipartisan contingent of lawmakers have co-sponsored a bill for a $60 billion refill of RRF. But even if the fund does reopen, operators grappling with labor challenges and new COVID-19 restrictions could go under before more grants are on the table. Eighty-eight percent of small business owners say they fear the delta variant will negatively impact their recovery, according to a new Alignable report.