Loan application

SBA disaster loan application problem exposed 8,000 businesses

In another blow to small businesses trying to save their businesses, the Small Business Administration (SBA) admitted on Tuesday that its website suffered from a glitch that allowed “personally identifiable information” about thousands of businesses to flee online.

The SBA sent notices to nearly 8,000 businesses on Tuesday, saying information they shared in their Economic Disaster Loan (EIDL) applications may have been exposed to other applicants. In a statement to CNBCthe SBA said it “immediately” patched the flaw after discovering the bug, and it should no longer be an issue.

Not to be confused with the Paycheck Protection Program, EIDL loans are alternative financing options for businesses impacted by the coronavirus outbreak. Applicants can obtain low-interest loans from the SBA that are repayable for up to 30 years to help finance their operations. EIDL loan applicants are also eligible for loan advances of up to $10,000 which would not need to be repaid.

The revelation is just the latest black eye for the SBA and banks in general, after the country’s small and medium-sized businesses failed to qualify for PPP financing before the $350 billion ran out. allocated to the program. The federal government plans to pass a measure this week that could recapitalize the P3 fund, but there’s still no guarantee that every company that can qualify will actually get the funding it wants.

It is unclear exactly when companies exposed to the EIDL loan glitch may have been affected. However, the agency told affected businesses that they can get a free year of credit monitoring to make sure they are not victims of identity theft. So far, the SBA told CNBC, there have been no indications of wrongdoing among those who viewed the personal information.

What this means for businesses, however, is another story altogether. Businesses facing lost revenue, layoffs, and countless other issues now have to worry about their personal information leaking. It’s a stack that these companies didn’t need. And I hope that’s a mistake the SBA won’t make again.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.