Julio: So for right now, anyone that’s interested in applying that owns a business and has not applied, they have now literally a short window of time to apply because of the hard date of December 31st.
There are loans with 3.75% fixed interest, 2.75% if you’re a nonprofit and there are 30 year maturity. So first question is there still money available for these loans for businesses that still need to apply?
Julio: Yes, there is money that was allocated through amendments under the CARES Act. So there is a funding right now available through the end of December 31st. After December 31st funding or no funding, it ends.
S., the entire country has been declared a disaster zone, they would still likely be eligible for an EIDL loan, an Economic Injury Disaster Loan
Gene: Got it. If you’re a business that’s applying, you’re applying directly through the SBA for this, not through a lender. That’s my understanding. But also, what are the requirements? How is the business eligible still for these loans? Do they just have to be in the disaster area or do they literally have to prove that they were affected by COVID?
Julio: What’s interesting is that COVID, the way the declaration was endments since March, it allows any small business in the contiguous United States, including Puerto Rico, Virgin Islands, Guam to apply into the program. What they have to do is basically provide that they were in operation as a business back in . For instance, if you’re a new company that just started a month ago, you would not be able to apply because the disasters, the way declarations are declared is you were impacted on the date of the , but there was back dated to the beginning of COVID, which was tracked to . And that’s how the means that the business had to have been impacted in that year.
So what the administration did was then add into the language that a business can now include a payout of their debt through the EIDL loan proceeds
Gene: Because some of my clients or some of the people that I talk to and readers that I talk to, I don’t think they really realized that even if they had a ple, if they were just located in the U. Is that a fair statement?
Gene: Other question for you, when president Biden recently issued the mandates around vaccines, he had a little change to the economic injury disaster loans. I think businesses can now use proceeds of those loans to pay down existing debt. Is that correct?
Julio: Right. They’re limited under economic injury, the word economic injury under what we call standard operating procedures, which are the policies and procedures in place for disaster lending is for working capital. The definition of working capital is basically for operating expenses that are probably under one year, and it’s not for capital expenditures. For instance, paying to buy a truck, pay to renovate your property, expand it. That’s not the purpose of the Economic Injury Disaster Loan, it’s just basically to keep your business in operation the way it was before the whatever the economic injury was in this case is COVID. So if you were doing $100 ,000 in revenue, the idea behind COVID is to keep you at $100,000 in revenue by helping you with your operating expenses, inventory accounts payable, that kind of stuff. What’s been happening is that debt loans are out there that a lot of these more businesses have to pay down and they’re weighing on them because they were shut down.