EIDL — Funding for your Business
It’s December 2020 and we are STILL in the MIDDLE of the pandemic.
A lot has happened since March and I know that my focus has been keeping my head on straight and keeping my business above water. It’s the way I take care of my family, so I do what I can to make sure we stay afloat and am always looking for ways to help.
Enter in the Emergency Injury Disaster Loan or EIDL.
It is funding that is backed by the Small Business Association (SBA) and designed to give us business owners (AND Independent Contractors) some flippers so we can keep on swimming and keep our business afloat during this storm.
No longer is the SBA offering Grant Money (that you would not have to repay back) for EIDL, but they ARE still offering this loan (as of December 2020 - when this article was written.) - and with some strategic planning, if you need it, you can apply and hopefully be approved to receive cash funds (directly to your bank account) to keep your business moving.
We, at JAC, can apply for on your behalf for a fee, but know that you can apply for yourself! So, I wanted to lay out some of the initial requirements needed for your business to see if you qualify:
Must be a small business owner (per the SBA guidelines). In a nutshell as long as you have under 500 employees - you’re in!
Must have had revenue in the last 12 months - prior to January 2020 —-> So if you made money in 2019 + a small business - you qualify!
There are a few other qualifiers (like not participating in illegal activity and not being part of a Government industry or sector).
Once you qualify, you will need to complete the application, which can be found here. Some key information they ask for within the application are:
Your SSN or Business EIN
2019 Revenue
2019 Cost of Goods Sold
Your Industry
Do you own your business and if so, how much ownership do you have?
In some cases, after you submit your application for processing - you may be asked for a copy of your 2019 tax returns. It is best that the 2019 revenue you report ties to your tax return. In general, that is a rule of thumb and something we can talk about in more detail later.
Here are a few things to note:
As an Independent Contractor you would use your SSN and as a Business owner - you guessed it - you will use your EIN when completing this application.
If you made money in 2019 but did NOT file a tax return or do you NOT know your total number to report - JAC provides services to organize your finances and prepare your tax return (you should file with the IRS) so that you can still apply for this EIDL Funding! Don’t count yourself out just yet, just complete our contact form here, so we can help you out.
After you submit the application, you will receive an email to create an account with the SBA. Within that account, over time, as your application moves through the approval process, you will be able to see how much of a loan is being offered, verify the bank account you would like the funds to be deposited too, verify your identity and sign the final contract.
Note you can take $0 or ALL of the loan that is offered —- any amount! We recommend sitting down your CFO to understand the company need and get comfortable with the repayment plan to ensure, it helps you and does not hurt you.
If you’re saying —- I don’t know about the loan. I don’t want that held over my head. We hear you! Who does? But if you are in need - let us tell you that these loan terms are favorable. With proper planning, they should not negatively impact you, in any way. And as always, we do suggest to DO YOUR RESEARCH - but below, we have laid out the terms.
EIDL Terms
Interest rate of 3.75% (for-profit)
Interest rate of 2.75% (non-profit)
Length of loan repayment - 30 years — meaning you will make monthly payments for 30 years to pay off the loan.
1 Year Deferment — those monthly payments do not begin until 1 year after the loan is closed. Note that interest will still accrue during that time.
No prepayment penalty — if you’d like to payoff this loan sooner than 30 years, go right ahead.
We hopes this helps you make some decisions about your business during these uncertain times and identifies some opportunities STILL available.
If there any questions, don’t hesitate to ask!!!
Let’s Keep Our Businesses Alive!
Jamila Akia