Covid Relief Loans Are Haunting Small Businesses

Small Businesses Struggle With Pandemic Relief Debt

The Small Business Administration lent $378 billion to help keep businesses afloat during the pandemic, but collecting those loans is proving difficult.

For Chris Towns, a blueberry farmer in Alma, Ga., the loans that once offered a lifeline have become a long-term burden. When Covid-19 disrupted the economy, shoppers stayed home and limited purchases to essentials, leaving him facing weak returns on his crop.

The federal government offered relief through 30-year, low-interest loans. Towns first borrowed $125,000, then increased the total to $495,000 when another round became available the following year. He said he saw the money not only as a way to survive, but also as capital that could help him expand if conditions improved.

Mounting Pressures

Instead, Towns ran into what he described as one of the toughest farming economies in generations. Labor and fertilizer costs kept rising, while blueberry prices failed to keep pace. Repeated freezes reduced his yields, and Hurricane Helene destroyed half of his blueberry plants in 2024.

Now he fears falling too far behind on the loan. If he becomes more than 90 days delinquent, the debt could be referred to the Treasury Department for collections. That could allow the government to intercept payments from federal agencies, including Agriculture Department subsidies.

Towns said he has done everything he can just to cover interest payments, including taking out another loan from a Georgia state agency. “I’m not making any progress on it,” he said. “I’m never going to get it paid off.”

A Broader Problem

His situation reflects a wider challenge for a pandemic relief effort that may ultimately cost taxpayers more than policymakers expected.

As the pandemic spread through the economy, Congress appropriated trillions of dollars to support businesses and workers. Much of that aid came through grants, unemployment payments and forgivable loans. But the SBA’s disaster lending program also issued hundreds of billions of dollars in loans that were meant to be repaid, and for some borrowers, that is becoming increasingly difficult.