I hope everything is going well for you and your families.
Just wanted to take this time to give you some of my feedback on the SBA programs that are out there:
Economic Injury Disaster Loan (EIDL):
Register At – https://disasterloan.sba.gov/ela/
This is designed to help businesses that have been affected by the Coronavirus.
It is available across the USA.
Monies distributed directly from the SBA.
Interest rate of 3.75%, deferment of interest and principle for 1 year.
$10K Grant regardless of acceptance or not.
Payroll Protection Loan Program (PPP):
It is run through your bank.
Meant to cover Payroll and some overhead expenses for 8 weeks.
4% rate with 6 month deferment of principal and interest.
Loan amount will be forgiven if the employer’s payroll is maintained for an 8 week duration.
Loan amount is based off of your average monthly payroll (1099’s included) X 2.5
SBA is overwhelmed (and understaffed) with all of this. They are trying to leverage two loan products at the same time and everybody’s coming to the well to get water. The SBA’s system crashed on 4.7.20 “due to the overwhelming volume” of loan documentations coming in.
I hope those out there heeded the advice we put out last time and got in line as quickly as possible. I have received a notification from one bank this morning that they are discontinuing accepting new PPP applicants until their backlog is cleared (which once again leans on the SBA). This is not true for all banks, so please contact your bank today if you have not already started this process.
The EIDL is supposed to direct deposit $10K grants within 3 days of application. Over a week and a half later, I am not aware of anyone who has received this money. The overall loan product is supposed to be cleared in 21 days, but there is no way to know what amount it will be for. Also, the additional processing of the PPP paperwork has bogged down a system that was already overwhelmed leaving the 21 days as a dubious promise.
I am not blaming the SBA or the government for this. The SBA is not equipped to handle these kinds of things at this kind of volume. They need to hire thousands of workers (who all have to work remotely I assume) and it takes time to get all of that up and going. The federal government has good intentions (I believe), but promises and delivery are two separate items.
All of the money will get through at some point – probably all at the same time! If you have applied for both, just keep your head up and keep doing what you have to do to get from now until then. You will persevere. If you have not applied, get to your bank for the PPP and register online for the IEDL.
As a side note – I have heard a few times about people balking at doing these items in fear of getting audited later. That may happen (although with 30 million small businesses in the USA it seems unlikely), but I do not believe that should hold anyone back. If someone gave you $10K (IEDL) and/or covered your payroll for 8 weeks (PPP) and you had to go through a simple audit process, wouldn’t you do it? I have been audited a few times and it is not as scary as it sounds. This is just my opinion…
One misconception is that you cannot apply for both items. That is untrue and on a conference call with the SBA they actually encourage you to do so (or they did). You just cannot use the funds for the same thing. The PPP is to be directed towards payroll primarily and rent, utilities and insurance secondarily. Use the IEDL towards your current liabilities or current expenses (vendors, car loans, credit cards, etc.).
I hope some part of this helps! If you have any questions or need anything, please contact us at: