Economic Injury Disaster Loan Updates
Amber Faist (00:00):
All right. Hey Noah, thanks for joining us this afternoon. I’m really, I’m so appreciative of your time again. Um, I know you have just a wealth of information that we have to share with clients, and, um, we’re going to be talking about the EIDL, everybody’s favorite, uh, economic injury, disaster loan. Um, we’re going to get some updates and you can talk to us about a couple of things that are happening with it. And, um, what it’s looking like right now,
Noah Brockman (00:25):
You bet ya, so couple of things in order of how we heard them. Um, let’s see. So first we heard that it was extended as part of the ARPA, the America’s Rescue Plan Act, uh, SBA EIDL loan was extended. Meaning you could apply all the way up to the end of this calendar year. So the EIDL is going to be open until December 31st, 2021. That’s good news. Um, then we heard about loan deferral. So basically I think the deferral period, I want to say it’s 18 months. So, um, there’s, you know, the hashtag on that is no EIDLLoans2021. So, um, or, sorry. NoEIDLLoanPayment2021. That’s that’s the right hashtag delete that one. So that’s good news. That means better cashflow. Don’t have to worry about the non-payments um, for this year.
Amber Faist (01:32):
Can you just give me a general reminder? I mean, I know that these are super low interest rates and pretty favorable terms. Um, can you just give us like the 32nd EIDL blurb?
Noah Brockman (01:44):
Yeah. So it’s, um, 3.75% fixed rate, 30 year term loan direct from SBA. It’s not a bank loan, it’s an SBA direct loan. Um, collateral is taken over, I think it’s 25 loans over 25,000. And, um, this is the program that also came with a, the EIDL, um, advance, which is a grant. Um, the initial EIDL loan was set up to cover like six months of operating expenses and then the pandemic kept going and going and going. And so SP well Congress and I, well, somebody decided that we better extend this, this, the coverage of this loan period from six months to 24 months. So, um, at one point last year, when people were applying, they were kind of maxing out at $150,000 EIDL loans as like the top ceiling. And so with the 24 months, um, the ceiling on the maximum on this loan now is 500,000, which means if I got $150,000 EIDL loan that was designed to cover six months last year, and now it’s designed to cover 24 months, I can go back and re and apply for an increase, not a EIDL 2.0, Nope. Nope. Just an increase on the existing loan that you have.
Amber Faist (03:24):
Does this mean I can go and get alone and go like buy a commercial space now?
Noah Brockman (03:29):
Hmm, good question. No, so remember this is just for operating expenses, so I can’t buy, it’s not for, it’s not for an expansion. So, um, I did have a client who, who wanted to use it to buy a commercial space and needed a 10% down and a hundred thousand dollar loan would have done the trick, but yeah, not a good plan. So got to use it on that operational expense stuff like rent and payroll and insurance, can’t be buying new equipment. Um, but you know, like covering existing leases that you already had, um, insurance, like all that stuff, it takes to keep the business operating all those operating expenses.
Amber Faist (04:18):
What do you think about if I owned a coffee shop and I needed to add a patio space in the back, because all of my customers have to be outside now.
Noah Brockman (04:30):
So yeah, if you had space in the back and you needed to, let’s say, um, add some lighting and put up some, some like fencing and put seating out there and get some of those propane warmers and stuff so that people could have coffee outside. I think that would probably qualify because you’re, you’re doing it. Um, in response to, um, um, Oregon Health Authority and governor Brown’s restrictions on indoor dining. I don’t know. I don’t know that, that you could like, um, buy the, you couldn’t like buy the lot behind you and add that on as like a, a party parking lot. I think that would probably not work, but you could maybe leave. No, no, maybe you could,
Amber Faist (05:28):
If I had that question, would I have to ask the SBA, would they be the ones to, to kind of, you know, determine, you know, what that would look like?
Noah Brockman (05:37):
Yeah. I mean, if, if it’s, if it’s, if it goes pretty far beyond just decking out a patio to do outdoor dining, then like if it was into buying major new equipment or any, like you might ask SBA, but you definitely can’t be buying real estate.
Amber Faist (06:00):
Awesome. Well, thanks for clarifying. I know that that’s a little bit in the weeds, but, um, what I’m hearing is that EIDL is still open, um, is pretty fair terms if you’re looking for a small business loan and you know, it can cover some of those operating expenses so that maybe you can save revenue to do other things that you want to do with it. Um, and that the, um, loan deferral has, has gone out 18 months. So there’s no loan payments due in 2021.
New Speaker (06:34):
Awesome. Is there anything else that we’re missing here, updates about EIDL or any little nuances?
Noah Brockman (06:42):
Well, so part of the, um, America’s Rescue Plan Act, I think added like 15 billion to the ideal program for what are now being called targeted EIDL advances. Um, so first of all, they folks already have to be in the system and SBA has to invite them. So SBA, my guess is, has some way of like reviewing their files to see who is in a, um, targeted low income census track area in terms of their applicants in their system. And then they’re looking for businesses with 300 employees or less that can prove or demonstrate eight weeks of a revenue loss of 30% or more between March 2nd, 2020, and December 31 this year 2021. So that should be pretty easy for a lot of businesses to demonstrate 30% revenue loss over eight weeks. Um, so again, that’s something that SBA those targeted EIDL advances are something that the SBA is essentially following up with folks on and inviting them if they qualify,
Amber Faist (08:05):
But by invite only. Yep. Well, great. Thanks again for giving us this quick update. And, um, you know, this in the term in terms of business loans, I think this one, um, you know, would be really helpful for, for folks that are kind of struggling right now. And I kind of looking for that next funding piece to kind of help them as they’re transitioning into, um, hopefully a return back to normal.
Noah Brockman (08:30):
Yeah. Especially folks who already got an, EIDL loan maxed out at $150k or just needed more because remember it got expanded to cover 24 months. So that may be an option. I talked to some, like I talked to a gym recently who was in that scenario where they just needed more operating, um, more working capital to cover operating expenses. They had already gotten an EIDL loan and they, they weren’t really realizing that if they could apply for more
Amber Faist (09:02):
Great, well, thanks so much, Noah. Always a pleasure.
Noah Brockman (09:05):
Yeah. It’s like the lottery you gotta play to win.
Amber Faist (09:10):
Maybe that should be a hashtag
Noah Brockman (09:12):
Hashtag play to win. I’m sure.
Amber Faist (09:15):
I’m sure it exists already, but maybe like hashtag EIDL play to win.
Noah Brockman (09:19):
There you go. Yeah. All right. Well, thanks for having me on I’m sure. We’ll see you again soon to talk more about these programs and perhaps others.