The Economic Injury Disaster Loan (EIDL) initially came with a one year payment deferral which was later changed to two years. The Small Business Administration began approving these loans back in March of 2020.
For many, that deferral period is coming to an end and their monthly payments will begin. Let’s remember that this is a loan with a thirty-year amortization period that bears an interest rate for most at 3.75%.
EIDL’s are not forgivable loans like the PPP. You cannot send in a form showing how the money was spent, and have your repayment obligation vanish like Casper’s ghost. Also, the EIDL isn’t a grant, a gift, or a free handout of any sort, shape, or form.
It’s an old fashioned loan, and the only way to make it go away is to repay it. For many, those payments will begin in the next couple of months.
Please also realize that the deferral period was not a free ride. Interest has been accruing on these loans since day one, and that interest will be tacked onto the principal when your payments begin.
Let me leave you with this.
I’m sure you’ve been watching the stock market with sadness and apprehension as it dropped the last couple of weeks. All of the major indices are down somewhere between 3% and 9% since the beginning of the year.
The selloff may have bottomed out, with all of the major indices in positive territory today, but I can tell you that bear markets have a mind of their own. They bounce up and down as investor fear and buying opportunities come into play on a daily basis.
It’s certainly true that supply chain problems, inflation, and Omicron are changing everyone’s outlook on the future. Other difficulties such as a looming real estate crisis, a resultant credit crunch, and potential bank failures also weigh heavily on any investor’s mind.
Certainly the political climate in Washington and the impending crisis in Eastern Europe factors into the equation, but the question becomes are you a long or a short-term investor?
Anyone who has invested for any reasonable amount of time has been through down markets before. They drop for a while and come roaring back past the old highs. Brandd new records are set while people forget their worries of yesterday.
Please realize that historically, the last couple of years have been an anomaly. Markets increasing 20% annually never continue forever. Most people use a 5% annual increase as a benchmark when doing their retirement plans.
But one thing is certain. It doesn’t look like this is going to be a banner year for any of the markets.
Patience is key. Please ask yourself if you are a long or a short-term investor?
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. Whether you need Employee Retention Credits, PPP Loan Forgiveness, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Accounting Solutions Ltd.
Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.