Hundreds of thousands of businesses that applied for the EIDL Loan Program were shortchanged, given a new study completed by the Government Accountability Office.
The EIDL Program was established in 1953 to provide capital to businesses that went through disasters such as a fire or flood. The original cap for the loans was $2,000,000, or the extent of the economic injury, whichever was less.
When the C-19 pandemic hit, the SBA was tasked with getting as much money out as quickly as possible. The normal EIDL process was lengthy, given the estimates necessary to gauge a business’ actual economic injury. Rather than going through that process and given their concerns of running out of cash, the SBA set an arbitrary $150,000 limit on the loans.
This meant that many businesses did not get a loan for the actual amount of their economic injury.
Since March, the SBA has lent out $164B in EIDL Loans to 3 million companies. Another $200B remains currently unused.
There are restrictions on the money. The column I wrote going through those restrictions, can be found here.
If you have not availed yourself of this loan, it could mean the difference between staying open or not.
What can be done if you were one of the businesses where the $150K cap did not begin to cover your economic injury? Not much. The Director of the SBA has been asked by Congress to increase the limit, and nothing has changed. We will see in the coming months, if anything occurs.
Let me leave you with this.
It seems as if the other shoe is beginning to drop for many businesses. I have spoken to a couple of entrepreneurs who are now thinking about the possibility of bankruptcy.
Nothing breaks my heart more than these conversations.
I know what it takes to start a business, what it takes to keep them going, and what it takes to shut one down. I’ve been in the trenches doing this for almost thirty years.
There are certainly times in life when it seems like everything is against you. When you start a business, everyone who has never entrepreneured has advice. The nonsense never ends with the armchair quarterbacks. They know everything there is, never having done any of it themselves.
Once it’s off the ground, everyone wants to take credit for your success. The “I told you so’s” from all of the “Wanna Be’s” never ends in it’s own sickening cycle. People you never knew, take credit for your hard work.
But when a company goes down, you’re alone. People you knew for years won’t even take your call. Chicago’s a big town. It’s an easier place to reinvent yourself, but those extreme feelings of loneliness and failure slice through you like a razor.
My point is this.
If you are at this point, rather than being consumed with what is or isn’t, why not ask what’s next? It’s always easier to start something new out of something old.
Think about how hard it would be to set up even something as basic as a checking account, after a BK. You already have an office, telephones, computers, etc. Use what you have to get to the new chapter in your life. It’ll be much easier now, than it would be later.
If you have any chance of hanging on, then do. Reinventing the wheel is never easy. If what you have is over, then get on with your life and write the new chapter. You may find that your current failure was the best thing to ever happen in your life.
Don’t wallow in fear. Revel in the adventure, and do so knowing that we are here to help.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. If there is anything you need, whether you are a current client or not, you have but to ask. I’m here and I remain,
Accounting Solutions Ltd.
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