SBA EIDL Loans are ELIGIBLE for Rental Properties

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SBA EIDL Loans are ELIGIBLE for Rental Properties

David H.
Rental Property Investor · Portland, ME · Member since 2019 · 160 posts · 231 votes

ATTENTION LANDLORDS!

SBA Economic Injury Disaster Loans (EIDL) are eligible for Rental Property Owners.

Standard SBA Loans are not available for passive income (except Hotels and Self Storage)...

THESE ARE NOT NORMAL SBA LOANS

During Disasters the SBA Disaster Loan Programs expand the eligibility to non-profits and even homeowners in certain circumstances.

Please visit https://www.sba.gov/sites/defa...

See slide 7, which clearly states that Rental Property Owners are Eligible for relief.

Please understand there will be a massive bottleneck and these loans could take 4-12 weeks to actually hit the streets. If you need one of these loans, COME PREPARED. Follow the directions in that slide deck. Fill out forms right the first time. The SBA is NOT staffed for a nationwide disaster. These loans are not coming from banks, they are coming from the SBA, this will take a while. It will be first come first serve.

Loans may be up to $2MM secured and up to $25,000 unsecured

The historical approval of these loans is < 60% . I'm not saying you can or will get these loans. I'm only providing this information in the hopes it will help those property owners in severe distress in the coming weeks/months. This economic disaster WILL be worse than most expect. Plan accordingly.


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Natalie KolodijBusiness Member
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Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
6y

A few quick notes....

You shouldn't be putting any thing for COGS- rentals don't have this. This only applies to businesses with inventories. 

The applications ask for lost rents- that's what relates to you. 

Also worth noting- no one has received this loan advance/grant yet. Contacts at the SBA are saying 2-3 more weeks. 

Also worth noting there's no guarantee you'll receive $10k as a non -repayment grant. The wording in the act notes the advance is "Up to $10,000". It is totally up to the bank how much they approve. 

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  • Roy Gutierrez
    Investor · Oak Park, MI · Member since 2014 · 299 posts · 47 votes
    6y

    I applied for the EIDL, 5/3 received the email:

    Dear Applicant,

    We understand the challenges your business is facing due to the massive disruption caused by the Coronavirus (COVID-19) pandemic....


    What happens after this? How do they determine how much you get? I have 6 short term rentals, 2 houses that were starting to get rehabbed for future rental. I'm trying to refi one of my properties but my DTI is coming in high and was just denied, I need this loan more than ever!

    0Reply
  • Account Closed
    Investor · Columbus, OH · Member since 2017 · 861 posts · 1k+ votes
    6y
    Originally posted by @Roy Gutierrez:

    I applied for the EIDL, 5/3 received the email:

    Dear Applicant,

    We understand the challenges your business is facing due to the massive disruption caused by the Coronavirus (COVID-19) pandemic....


    What happens after this? How do they determine how much you get? I have 6 short term rentals, 2 houses that were starting to get rehabbed for future rental. I'm trying to refi one of my properties but my DTI is coming in high and was just denied, I need this loan more than ever!

     I had my EIDL loan go all the way through to signing the agreement and note (so far), I posted about it in the corona forum: 

    https://www.biggerpockets.com/forums/895/topics/831407-sba-eidl-loan-went-through-unlock-credit-files-to-verify-ident

    The first email I got started the same way "We understand the challenges etc".. I got that email 5/2. On 5/5 I got an email to create a login/password on their portal. From there I had to verify my identity, then the next day (5/6) I got an email saying my loan was approved and to sign the closing docs. 

    I included screenshots of all the terms and conditions of the loan. I just signed the loan docs earlier tonight, will update that thread if/when any funds get disbursed. 

    1Reply
  • Roy Gutierrez
    Investor · Oak Park, MI · Member since 2014 · 299 posts · 47 votes
    6y
    Originally posted by @Account Closed:
    Originally posted by @Roy Gutierrez:

    I applied for the EIDL, 5/3 received the email:

    Dear Applicant,

    We understand the challenges your business is facing due to the massive disruption caused by the Coronavirus (COVID-19) pandemic....


    What happens after this? How do they determine how much you get? I have 6 short term rentals, 2 houses that were starting to get rehabbed for future rental. I'm trying to refi one of my properties but my DTI is coming in high and was just denied, I need this loan more than ever!

     I had my EIDL loan go all the way through to signing the agreement and note (so far), I posted about it in the corona forum: 

    https://www.biggerpockets.com/forums/895/topics/831407-sba-eidl-loan-went-through-unlock-credit-files-to-verify-ident

    The first email I got started the same way "We understand the challenges etc".. I got that email 5/2. On 5/5 I got an email to create a login/password on their portal. From there I had to verify my identity, then the next day (5/6) I got an email saying my loan was approved and to sign the closing docs. 

    I included screenshots of all the terms and conditions of the loan. I just signed the loan docs earlier tonight, will update that thread if/when any funds get disbursed. 

     Thank you! My main question is how do they determine how much you're supposed to get? I had no chance to enter my properties or any other pertinent information, I think there was a box for losses? I don't even remember how much I put in there, my fear is that they will just give me a small amount as apposed to what I need and there's nothing I can do about it now.

    0Reply
  • Account Closed
    Investor · Columbus, OH · Member since 2017 · 861 posts · 1k+ votes
    6y
    Originally posted by @Roy Gutierrez:
    Originally posted by @Account Closed:
    Originally posted by @Roy Gutierrez:

    I applied for the EIDL, 5/3 received the email:

    Dear Applicant,

    We understand the challenges your business is facing due to the massive disruption caused by the Coronavirus (COVID-19) pandemic....


    What happens after this? How do they determine how much you get? I have 6 short term rentals, 2 houses that were starting to get rehabbed for future rental. I'm trying to refi one of my properties but my DTI is coming in high and was just denied, I need this loan more than ever!

     I had my EIDL loan go all the way through to signing the agreement and note (so far), I posted about it in the corona forum: 

    https://www.biggerpockets.com/forums/895/topics/831407-sba-eidl-loan-went-through-unlock-credit-files-to-verify-ident

    The first email I got started the same way "We understand the challenges etc".. I got that email 5/2. On 5/5 I got an email to create a login/password on their portal. From there I had to verify my identity, then the next day (5/6) I got an email saying my loan was approved and to sign the closing docs. 

    I included screenshots of all the terms and conditions of the loan. I just signed the loan docs earlier tonight, will update that thread if/when any funds get disbursed. 

     Thank you! My main question is how do they determine how much you're supposed to get? I had no chance to enter my properties or any other pertinent information, I think there was a box for losses? I don't even remember how much I put in there, my fear is that they will just give me a small amount as apposed to what I need and there's nothing I can do about it now.

    I feel like an idiot now, but I completely forget exactly what I put in the form. I should have taken a screenshot. I think they took my estimated losses (6 months of rental income if I remember right) and added maybe 10%. The amount of the loan was around 70k, being vague about exact amount just to protect myself. 

    You can call the 800 number on my screenshots in the other forum. When I called a few days ago, they picked up within a minute or two, and were quite helpful but did seem a bit harried, which is totally understandable given they are talking to stressed out business owners all day. 

    0Reply
  • Mike Barry
    Plainfield, IL · Member since 2015 · 111 posts · 17 votes
    6y

    I've been looking to apply all week but keep getting the message:

    "At this time only agricultural business applications will be accepted due to limitations in funding availability and the unprecedented submission of applications already received"

    Is there anyway to still submit an application at this time or must I wait?

    0Reply
  • Account Closed
    Investor · Columbus, OH · Member since 2017 · 861 posts · 1k+ votes
    6y
    I just saw this on the washington post website. They have closed the program except for agricultural businesses and also are limiting loans to 150k. 


    0Reply
  • Holly Qu
    Rental Property Investor · FL · Member since 2018 · 10 posts · 8 votes
    6y

    @Roy Gutierrez 

    It's my understanding that after you get approved you will have the opportunity to ask for more (or less) later, if you need it 

    0Reply
  • Bruce Kelsey
    Member since 2020 · 1 post · 0 votes
    6y

    The SBA Loan form has a required field for business name. I do not have a business. I report my rental income as supplemental income on my personal return. How do I fill the required field for business name?

    0Reply
  • Mark Whittlesey
    Real Estate Investor · Encinitas, CA · Member since 2013 · 225 posts · 91 votes
    6y
    Originally posted by @Shefali Rai:

    @Mark Whittlesey thats great! Which date did you apply on? 

    Sorry. Just saw this. I initially applied April 3. 

    Latest update is that my loans are ready for the next step (this happened Thursday night/Friday morning). I was "offered" 68K. I needed to create an account and accept the amount and terms (30 years, 3.75%, 12 months deferred on payments, payment of 330ish a month). You CAN accept/request less if you choose. My applications are now being processed. It sounded like they have not necessarily been approved yet. (On the form, there were also places to confirm your identity and how payment will be received- both of which I had already done).  Not sure how long till a decision will be made/funding will happen but it seems like the wheels are moving fairly slowly. 

    0Reply
  • Mark Huang
    Rental Property Investor · San Diego, CA · Member since 2017 · 27 posts · 13 votes
    6y

    I applied for my single multi family rental property in April. It wasn’t until early May that I got an email saying my application was being processed. Three days later I got $1000 grant direct deposited. 

    Last week I was offered a $4100 loan with the terms already stated here. My tenants have been able to pay and I’m wondering if I should take the loan. It’s better terms than my mortgage so if anything I should use it to pay off my mortgage or for utilities. 

    3Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    They gave me a 1k grant. Now they say I'm eligible for a 1k loan. That needs to be increased. 

    0Reply
  • Christopher B.
    Investor · Southeast, MI · Member since 2016 · 425 posts · 184 votes
    6y

    Did anyone have success in having their loan offer increased?  I am being sent in circles.  They said they will send to another group from increase, but I keep receiving emails about accepting the prior offer, which I of course don't want to do.  

    0Reply
  • Jack B.
    Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @David H.:

    @Scott F.

    You are correct, there is a $10,000 grant eligible for landlords as well. It’s not implemented just yet, but the mechanism is an advance that is requested upon application , this advance must be paid by the SBA to the applicant in 3 days. The applicant can keep the $10k and doesn’t need to pay back even if denied the loan.

    Unreal. Is it worth applying for?

    0Reply
  • David H.
    OP
    Rental Property Investor · Portland, ME · Member since 2019 · 160 posts · 231 votes
    6y

    @Jack B.

    Hi Jack,

    Unfortunately the SBA announced yesterday that the advance grant portion of the EIDL is out of funds.

    The $1,000-$10,000 grant no longer exists unless the government refunds this portion of the program.

    Please see this article from Forbes for reference:

    https://www.forbes.com/sites/allbusiness/2020/07/13/sba-eidl-program-favorable-loans-still-being-granted/

    You may still apply for the EIDL loan, which has favorable terms, just no more grants for now sadly.

    Best of luck!

    1Reply
  • Michael Barnhart
    Rental Property Investor · Cambridge, UK · Member since 2020 · 203 posts · 95 votes
    6y

    @David H. great info, thanks for passing this along!

    1Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    @Christopher B. I just had mine increased. They were easy to work with and we got it done. 

    0Reply
  • Christopher B.
    Investor · Southeast, MI · Member since 2016 · 425 posts · 184 votes
    6y
    Originally posted by @Mark Cruse:

    @Christopher B. I just had mine increased. They were easy to work with and we got it done. 

     What process did they have you follow?  I finally, after one month, received some direction to send the request to someone else.  I'm waiting to hear back from that team/group now.  

    0Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    I just called the number and asked for direction. A couple of times they called me for clarifications on my app. 

    0Reply
  • Christopher B.
    Investor · Southeast, MI · Member since 2016 · 425 posts · 184 votes
    6y

    That's great news.  I'm glad yours was completed.  I'll post when mine gets done

    1Reply
  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    It will come. Good luck. 

    0Reply
  • Emory Peterson
    Reno, NV · Member since 2020 · 2 posts · 1 vote
    6y

    I went ahead and took the EIDL purely for the cheap money. I think I may use the money to purchase a rental, seems like an easy way to put the money to work.

    1Reply
  • Devin RedmondPro Member
    Rental Property Investor · Bay Area CA | Maui HI · Member since 2018 · 49 posts · 47 votes
    6y

    It seems the EIDL program is a bit restrictive in terms of how the funds can be used:
    https://www.cohnreznick.com/insights/understanding-the-sba-disaster-relief-loan-program-for-covid-19

    Has anyone determined exactly what the funds can and can't be used for as it relates to owning and operating a rental property portfolio? My read is that using the funds as a down payment for a new property is expressly not allowed. And if you pledge the real estate as collateral, then might it complicate your ability to refinance in the future?

    0Reply
  • Holly Qu
    Rental Property Investor · FL · Member since 2018 · 10 posts · 8 votes
    6y
    Originally posted by @Devin Redmond:

    It seems the EIDL program is a bit restrictive in terms of how the funds can be used:
    https://www.cohnreznick.com/insights/understanding-the-sba-disaster-relief-loan-program-for-covid-19

    Has anyone determined exactly what the funds can and can't be used for as it relates to owning and operating a rental property portfolio? My read is that using the funds as a down payment for a new property is expressly not allowed. And if you pledge the real estate as collateral, then might it complicate your ability to refinance in the future?

    Hi Devin,

    I have spent quite a few hours working on finding better answers to these questions.  I even called SBA multiple times and nobody there could provide more specifics. They said I'd get a call before my loan was funded to explain, but that did not happen either. I was fully funded without speaking to anyone. 

    So, I am just being as careful as I can to document every penny spent from that account that only has the EIDL money in it. I only spend that money on the "approved" expenses listed everywhere, same as on the link you included on your post.

    Acceptable purposes include working capital, paying fixed debts, payroll, accounts payable, and paying other bills that could have been paid.

     Any other rents/funds I spend on the items that may not be approved, like expenses that could be considered improvements etc.

     So all of my normal fixed expenses, mortgages, utilities, insurance, property taxes, I pay from the EIDL and everything else, anything that is maybe a gray area from my normal expense account.

      As far as the collateral question, again I asked SBA and researched as much as I could and could get no real answer. I can tell you the only thing included with my contract which lots of people showed they got the same on this thread was very vague. No addresses/ documentation or attachments of any kind were requested or made to any of my properties. 

    Hope any of that is helpful!

    Holly

    1Reply
  • Roy Gutierrez
    Investor · Oak Park, MI · Member since 2014 · 299 posts · 47 votes
    6y
    Originally posted by @Mark Cruse:

    @Christopher B. I just had mine increased. They were easy to work with and we got it done. 

     Hey Mark,

    I tried to increase my amount after I was approved (got wrong advise and put loses for 1 month instead of 6 months), I waited for them to respond to my desire to increase call reps, sent messages and no response from them, finally a rep told me if I didn't take what I was offered I will lose it so I had to take it. Then they had a new program to allow increases (came about 4 months ago), I applies a couple of days after it came out, it's going on 4 months now and nothing. Did you call a special number? As far as what I was gathering from the reps it was not a good chance of happening, it was impossible to reach loan officers, what number did you call? who did you speak to?

    Thank you!

    1Reply
  • Roy Gutierrez
    Investor · Oak Park, MI · Member since 2014 · 299 posts · 47 votes
    6y
    Originally posted by @Christopher B.:

    That's great news.  I'm glad yours was completed.  I'll post when mine gets done

    Hi Christopher,

    Also Michigan here, were you able to get a decision on an Increase? Waiting almost 4 months here!

    0Reply
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