Details are emerging where Economic Injury Disaster Loans (EIDLs) can be forgiven through an Offer in Compromise process. This may provide needed relief to businesses that have closed or been sold.
This has nothing to do with the PPP Loan programs that had a forgiveness process built in. Nor is it relevant to the EIDL Grants that were made in 10K and $5K amounts. Those grants weren’t loans in the first place that needed repayment.
But the Small Business Administration EIDL’s that initially were lent in the amount of $150K and were expanded up to $2M were 30 year loans at an interest rate of 3.25%. Many of these loans under the amount of $200K weren’t personally guaranteed.
This is a newer process. A formal “Carved-In-Stone” process is yet to be determined. Initially, these are the questions that would be relevant.
1 – Was the loan personally guaranteed?
2 – What collateral was pledged? Does that collateral still exist?
3 – Can you afford to repay the loan?
4 – Is the business still open?
5 – Are there other SBA Loans that need to be settled as well?
Don’t make the mistake of thinking that this is an easy process. If your business is still open, or they can prove that you can repay the loan in any way, they’re probably not going to provide any relief. Even asking would probably be foolhardy.
Please also realize that this is a legal process. I’m not an attorney. I don’t even play one on TV. If this is something you’d like to explore, please contact the attorney of your choice.
I just wanted you to know that it exists, just in case it becomes necessary.
Let me leave you with this.
An interesting thing happened in the artificial intelligence arena as it applies to accounting. ChatGPT, which has already passed the Wharton MBA, the bar exam, and 13 out of a possible 15 advanced placement courses officially bombed its first accounting test.
The exam included subjects like Accounting Information Systems (AIS), Auditing, Financial Accounting, Managerial Accounting, and Taxation Questions. Human students who were given the same exam passed with an average grade of 76.7%. ChatGPT bombed at a paltry score of 47.4%.
It did well on the Auditing questions and terribly on anything related to Tax, Financial, or Managerial Accounting.
Many have said that artificial intelligence will take over the accounting industry in a few years. But the simple fact remains that most of what we do requires conscious decision making.
If an owner writes a check to themselves, how can any machine decide if its payroll, a reimbursement, a loan repayment, or a shareholder distribution? By simply looking at a check, a payee, and an amount, machines can’t make that determination.
Ultimately, that’s most of what we do in accounting and tax. We apply tax law to individual circumstances in a way that favors and protects our clients.
Making those decisions is what it’s all about. Maybe the time will come when a machine can make those decisions? It could happen. It’s possible. But at that point, no one’s job would be protected.
Let’s hope that day never comes.
We’re all going to get through this. Let’s get through it together.
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