Beginning April 6th, 2021, the Small Business Administration is increasing the upper limit of C-19 Economic Injury Disaster Loans from $150K to $500K. Given the length of the pandemic, the SBA has decided to increase this assistance from six months to twenty-four.
Please remember that this isn’t “Free Money”. This is a regular thirty year loan at 3.75% interest that cannot be forgiven and must be repaid. Initial payments are deferred with the unpaid interest being tacked onto the first payment.
Also, this money comes with strings attached. It cannot be used to expand your business. It’s purpose is only to help you through a difficult time. Also, during the period of the loan, owners are not supposed to take distributions or dividends from their entities. Further, it is not supposed to be used to pay off other loans.
Any new loans that are still in process will be automatically considered for the new loan limits. Further, existing EIDL recipients will be able to request a loan increase beginning April 6th.
Let me leave you with this.
It’s becoming apparent that the long arm of the law is beginning to wield its considerable power in the application of the stimulus money.
If you’ll remember all the way back to last year when all of this started with the first PPP Loan draw, they couldn’t get the money out fast enough. Many were given additional funds to cover Independent contractors. Others were given EIDL Loans that were wrapped into gargantuan PPP Loans.
Then came the scandals with people getting PPP money and buying Ferrari’s and vacation homes in the islands.
The second PPP draw has been anything but easy for many because it wasn’t automatically “rubber stamped”. They actually went through an underwriting process. They actually checked out who they were lending to.
There are a couple of other things that should be mentioned.
The second draw PPP required a borrower to certify that their receipts were down 25% from a quarter in 2020 to the corresponding quarter in 2019. This is not just a box that one would check. It requires you to actually put in your sales to certify your eligibility.
Then there’s the application for the increased EIDL Grant. This is for people who didn’t get the full grant last year. In order to be eligible, an entity must be down 20% from one eight week period in 2020 to the same period in 2019.
The application requires you to put in all of your sales figures by month beginning January 2019 through February 2021.
Do you see what they’re doing?
What if your sales figures on one application don’t match the other? Do you think they’re just going to let it go? This is the sort of thing that a computer can check.
Now think about all of the work that we’re doing on the Employee Retention Credit. This is money where they’re trying to come up with reasons to not pass it out. What if the numbers on your PPP Loan forgiveness application don’t perfectly match your ERC request?
The money is out there, but we must be careful. The rules are insane. If you need help, please call.
We’re all going to get through this. Let’s get through it together.
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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