Basics of the eidl loan explained

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Hey, everybody Justine Lackey from Good Cents bookkeeping. I’m here with my short video series about the summary of the CARES Act and COVID-19 resources available to our small businesses. Before I get started, just some details on fine print. Information is changing moment to moment. It is just all over the place at this point. The SBA was releasing guidelines TO their guidelines as late as April 6th 2020, which is about 36 hours ago. If you are not my client, if you’re just a member of my small business Community, please consult with your financial professionals regarding which program is best. This presentation is not legal tax or accounting advice. If you don’t know me, I am Justine Lackey. I am the founder of Good Cents Bookkeeping Inc. We are one of the premiere virtual bookkeeping companies in America. We are one of the oldest; we’ve been around for over 12 years. I am a small business finance expert and you can find us

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at goodcentsbookkeeping.com.

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So basically there are three main forms of relief available to small business owners. I’m not going to focus on unemployment or things that are available to individuals. This presentation is for my small business owners. The first is the EIDL, which is the Emergency Injury Disaster Loan. The second is the PPP which is the Paychecks Protection Program, and the third and final form of relief is tax credits and changes to tax laws.

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So today we’re going to focus on the EIDL which is the Emergency Injury Disaster Loan.

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The Emergency Injury Disaster Loan was updated with with the CARES Act– It’s actually an old program– it’s what we’ve used for other disasters such as hurricanes and floods.

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There were some significant changes that came along with the CARES Act; the first is, the loan can be approved based solely on credit score.

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Secondly, you do not need to submit tax returns or make a personal guarantee. That is not required. So those are the big changes that came to the EIDL through the CARES Act.

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The Emergency Injury Disaster Loan is available to any business with less than 500 employees. It’s a low-interest loan or loans provided by the SBA, the Small Business Administration. It’s super easy to apply on their website, and I’ll give you that website at the end of this presentation.

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Part of this loan is an advance.

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You must have been in business by January 31st (2020) to qualify for the EIDL.

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So my team and I have been on the phone with the SBA many times this week. As far as we know, as of April 7th, no one, no applicant, has completed the full program or been funded yet. Applications will take 3 to 4 weeks to process. This is what SBA reps will tell you. My personal feeling is, is that, based on the number of applications we are seeing, I would expect it to take longer than that. The next step after you apply is you’ll be assigned a case manager or loan officer.

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The approval may be based on credit and payment worthiness. It’s a little cagey. They’re, like, I’m asking, like, “Who’s gonna get it and who’s not gonna get it?” It’s not really clear, and I’ve asked them if they have guidelines, and I’ve been told they do not. It seems as though a lot may be left up to the loan officer’s discretion. So my advice to you is — more flies with honey than vinegar. Be really nice to anybody who gets in touch with you. The loan can be used for paid sick leave, payroll, rent, or mortgage payment, or repaying obligations that cannot be met due to revenue loss.

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Now here’s the thing.

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In the small business community I’m hearing, “It’s free money, it’s free money, it’s free money.”

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It’s not exactly free money. Let’s just talked about that. So the advance is supposed to be the forgiven portion of your emergency loan. So the advance will be up to $10,000. However, if you take out an EIDL, if you get an EIDL, an emergency disaster loan, and then you take out a PPP, which is the Paychecks Protection Program, that’s a loan that will come through your private bank. Your advance for your EIDL is not forgiven; it’s applied to the forgiven portion of your PPP. And, I mean, come on, is any money ever really free? I’m watching this one. I hope it’s true. I think the guidelines are still changing, and I think it’s gonna remain to be seen.

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To apply for the EIDL, you can simply Google it, you know, the EIDL application. That website address is pretty easy. It’s covid19relief.sba.gov/#/. Again, gonna leave that slide up there for a minute so people can take it down: covid19relief.sba.gov/#/. So that’s how you apply. The application is very easy. There’s about five different sections of it. You will need your date of birth. You will need your revenue. You will need, I believe when your business was formed, and you’ll need to know where you were born, hopefully you know that. But the process is pretty simple.

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The email support for the EIDL is disaster@customerservice.sba.gov. So that’s disaster@customerservice.sba.gov.

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We have, or I have, formed a pop-up group on Facebook to help small businesses navigate all of these things as they’re all shifting and changing. So please do come join us. That’s facebook.com/groups/bookkeepingandaccounting.

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When you’re applying for these loans, you might realize, “Oh my God, I’m behind on our bookkeeping.” You are absolutely going to need profit-and-loss numbers… um, a lot of different information when you apply for the PPP loan — that will be my next presentation. If you need help with bookkeeping or loan assistance, please do reach out. You can go to the goodcentsbookkeeping.com website. There is a ‘Book My Free Consult’ right on the website. And that is our summary of the EIDL Loan. As always, thank you for joining me, and look out for more videos in this series. And I hope to see you on Facebook.