I first wrote an update on The EIDL Loan a little over two weeks ago. Unbeknownst to most, the SBA had once again opened it up to all businesses, rather than just agricultural based enterprises.
In that period, I have heard from not less than six clients who have since applied for and received proceeds. The client that I spoke to yesterday, who is a Brother in the Manufacturing Business out in the suburbs, remarked that it was almost too easy to receive these funds. The turnaround time for him was 48 hours.
Please allow me to refresh your memory on this SBA Loan Program. The terms are as follows…
– It’s a standard 30 year loan
– Unlike the PPP, it is not forgivable
– There is no prepayment penalty
– Principal and Interest Payments are suspended for one year
– The interest rate for regular businesses is 3.75% and 2.75% for non-profits
– Zero Points
– $100 closing fee
– Loans are limited to $150,000
The underwriting process is unlike any other one that I have ever seen. They ask you two questions which are…
– What was your gross sales last year?
– What was your cost of goods sold?
Somehow with that information and your credit score they determine whether or not you will receive the loan, and in what amount. Don’t ask me how this is done. I have no idea.
There are three points that I need to make.
First. it doesn’t look like anything else substantial is going to be coming from Washington, and nothing of substance is yet to come from Springfield. With that in mind, this could be the cushion that you need in order to get through this thing.
Second, there are no restrictions that I know of on the money. The loan terms are incredibly favorable. You could use this to replace existing financing that is at less favorable terms. Or you could just let it sit in the bank so that you could sleep at night.
Third, no payments are due for the first year. You could take the loan, invest it for a year. pay back the principal, and bank the residual.
The SBA Covid-19 EIDL Application can be found here
https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
Let me leave you with this one thought…
We took off last week and spent a week in Cozumel. I didn’t want to go to Wisconsin, where I would be forced to spend two weeks in quarantine, and Mexico is one of the few places on the planet that is still accepting our passports.
But the Mexico that I knew is completely unlike the one that I found.
They initially shut down the island on March 17th, St. Patrick’s Day. A 5:00 pm to 5:00 am curfew was established. Mexico does not have unemployment insurance or the other social safety nets that have kept America afloat. If you don’t work, you don’t eat. Since 80% of the jobs on Cozumel are directly tied to tourism, these people are in trouble.
The 5:00 pm curfew was originally put into place to stop crime. If you were caught out of your home after curfew, an unhappy police officer or national guardsmen with an M-16 would make sure that you got home immediately without any criminal intentions.
That curfew is now 8:00 pm. We found ourselves going to dinner at 5:30 pm so that we could be back at our hotel before curfew. The days of going out to Mexico’s Nightclubs, with them closing whenever you decided to leave, are over.
Just about everything was closed. I don’t know how many eating establishments there are on the island. It has to be a couple of hundred given the 40,000 tourists that normally hit the island at 10:00 am just to leave at around 6:00 pm that same day. There were only six or seven restaurants that were open.
Cozumel’s idea of helping families during this nightmare is providing them with a box of food every other week. That box normally includes a pound of sugar, a box of salt, a bag of rice and another one of pasta. That’s it.
And you think that you have problems? Fahgetabadit. The people that I met there have more issues than Newsweek.
They are talking about the cruise ships coming back in late October. There is a 30% restriction on sleeping rooms in Cozumel. You and I both know that no cruise ship is ever going to go out at a 30% restriction. If they did, no one would be able to afford the tickets.
At least we were able to get away after tax season. The diving was spectacular.
Have a little hope. We’re all going to get through this. We will all get through this together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. If there is anything that you need, whether you are a current client or not, you have but to call. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
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