EIDL SBA Loan advise

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EIDL SBA Loan advise

Neel Shah
Billerica, MA · Member since 2016 · 23 posts · 5 votes

Hello BP,


I got message from EIDL today stating: "Your SBA Application No. *** is ready for the next step. Create your SBA Economic Injury Disaster Loan Portal account to provide additional details or requested documents."

I got $1000 grant a few weeks ago. I am not planning on applying for an actual EIDL LOAN any longer (I received needed funds through other means). I am sure I am not the only one in this boat. did anyone else get this email. are you ignoring it? I don't want or need any more of EIDL money, and I certainly have wasted enough time with this kind of paperwork...

Wondering on how I should handle this.

Any feedback/experience with this is appreciated.

Thanks

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Salvatore Trapani
Realtor · Bayside, NY · Member since 2014 · 19 posts · 9 votes
6y

@Benjamin A Ersing
I have not accepted the loan, just yet.
I received an email from an "Attorney Advisor" from SBA requesting an update on whether or not I would be signing/accepting loan docs.
Since I had a direct person to ask, I questioned the use of the funds and certain terms in reference to sale of company assets.

I'm still contemplating the use of these funds.

Here was the response I received:

"EIDL funds usage is limited to the daily operating expenses of business and aren’t for investment or improvement purposes. Regarding payroll, you may use funds to compensate those individuals for their services in the ordinary course of business.

The SBA UCC filing reaches all business assets to the value of the loan. It’s a general, blanket UCC filing that doesn’t prohibit the acquiring or transfer of assets in the ordinary course of business.

A loan amount of $25,000 or less is unsecured, and removes the Security Agreement and UCC filing, but loan proceeds usage requirements remain in place."

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  • Joseph CacciapagliaBusiness Member
    Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
    6y

    I received the email, and it was only a few minutes to actually get the loan from that point. You verify your identity, and then do an electronic signature. There is no actual "application" beyond that. I think there was an option to decline it as well. It's 30 year money at 3.75% interest and no payments for 12 months. I couldn't pass that up.

    [email protected]979-218-2286
    Joseph Cacciapaglia powered by Morty
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  • Doug Pintarch
    Rental Property Investor · Harrisburg, PA · Member since 2018 · 369 posts · 406 votes
    6y
    Originally posted by @Joseph Cacciapaglia:

    I received the email, and it was only a few minutes to actually get the loan from that point. You verify your identity, and then do an electronic signature. There is no actual "application" beyond that. I think there was an option to decline it as well. It's 30 year money at 3.75% interest and no payments for 12 months. I couldn't pass that up.

    Joseph, I'm curious.   When, if at all, did you discuss an amount with them?  Was it in the portal they took you to in their email?

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  • Joseph CacciapagliaBusiness Member
    Lender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
    6y
    Originally posted by @Doug Pintarch:
    Originally posted by @Joseph Cacciapaglia:

    I received the email, and it was only a few minutes to actually get the loan from that point. You verify your identity, and then do an electronic signature. There is no actual "application" beyond that. I think there was an option to decline it as well. It's 30 year money at 3.75% interest and no payments for 12 months. I couldn't pass that up.

    Joseph, I'm curious.   When, if at all, did you discuss an amount with them?  Was it in the portal they took you to in their email?

     When you log into the portal it tells you how much you're approved for. If you decide to accept, it let's you choose how much, up to the full amount of the approval.

    [email protected]979-218-2286
    Joseph Cacciapaglia powered by Morty
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  • Doug Pintarch
    Rental Property Investor · Harrisburg, PA · Member since 2018 · 369 posts · 406 votes
    6y

    Got it, thank you!  You're the first person that I've heard that from, good to know it's done with some choices given.

    0Reply
  • Shefali Rai
    New York City, NY · Member since 2015 · 23 posts · 9 votes
    6y

    @Doug Pintarch - they make you a maximum offer and your choices are only if you want lower than that. You dont have a choice to go higher. 

    1Reply
  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    6y

    Keep in mind if you go over $25k they own an interest in ALL your business assets and you need to get their approval before selling any. 

    Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
    Kolodij Tax & Consulting
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  • Doug Pintarch
    Rental Property Investor · Harrisburg, PA · Member since 2018 · 369 posts · 406 votes
    6y
    Originally posted by @Shefali Rai:

    @Doug Pintarch - they make you a maximum offer and your choices are only if you want lower than that. You dont have a choice to go higher. 

    Oh I strongly doubt we'd need higher, nice to know we don't have to take it all.

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  • Doug Pintarch
    Rental Property Investor · Harrisburg, PA · Member since 2018 · 369 posts · 406 votes
    6y
    Originally posted by @Natalie Kolodij:

    Keep in mind if you go over $25k they own an interest in ALL your business assets and you need to get their approval before selling any. 

     Saw that little tidbit also, Natalie...yikes!    No thank you!

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  • Toni Mensching
    Member since 2019 · 3 posts · 0 votes
    6y

    I received this same email.. HOWEVER when I added up the monthly payment and the 30 year term the total was MUCH MORE THAN DOUBLE the loan. 

    Am I missing something?

    0Reply
  • Neel Shah
    OP
    Billerica, MA · Member since 2016 · 23 posts · 5 votes
    6y

    Thanks everyone for comments.

    @Natalie Kolodij - I am not planning to take EIDL loan.  Am I obligated to take the loan?  Should I reply and formally "decline" or just ignore the email and leave it at that. 

    0Reply
  • Sara Liv
    Member since 2020 · 14 posts · 1 vote
    6y

    Reply and decline if possible. There are people who really need this and it’ll free up the bandwidth

    0Reply
  • Dustin Johns
    Real Estate Agent · Columbia, SC · Member since 2009 · 93 posts · 6 votes
    6y

    Assuming someone in real estate accepted a max $150,000 eidl loan, what type of spending is allowed? Can you expand income opportunities such as using the money for downpayments on rental property? How can REI's benefit? The rate is obviously great, and deferred for 12 months.

    0Reply
  • Neel Shah
    OP
    Billerica, MA · Member since 2016 · 23 posts · 5 votes
    6y

    Hi all - here is an update.  there is no option/button to formally decline the loan on the SBA EIDL portal.  I spoke to SBA and they asked me to ignore the request, it will "go away" in 30-days. He also notated my account for SBA documentation purposes. 

    0Reply
  • Derek P.
    Investor · White River Junction, VT · Member since 2012 · 42 posts · 14 votes
    6y

    @Natalie Kolodij

    Anywhere I can read more about this 25k limitation? I was eligible for up to 69k

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  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    6y
    Originally posted by @Derek P.:

    @Natalie Kolodij

    Anywhere I can read more about this 25k limitation? I was eligible for up to 69k

     It should be in your loan terms. Any loan under $25k they're not colatoralizing but over $25k they are- and it's on all your assets, and FUTURE business assets over the life of the loan. 

    Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
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  • Ross Smith
    Real Estate Agent · Conroe, TX · Member since 2016 · 10 posts · 5 votes
    6y
    Originally posted by @Toni Mensching:

    I received this same email.. HOWEVER when I added up the monthly payment and the 30 year term the total was MUCH MORE THAN DOUBLE the loan. 

    Am I missing something?

     It's just like a mortgage. It's an amortized schedule, if you keep the loan that loan you will accrue a ton of interest.  

    1Reply
  • Sara Liv
    Member since 2020 · 14 posts · 1 vote
    6y

    @Natalie Kolodij the sba has a claim on all of your personal assets or all of your business assets?

    0Reply
  • Natalie KolodijBusiness Member
    Moderator
    Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
    6y
    Originally posted by @Sara Liv:

    @Natalie Kolodij the sba has a claim on all of your personal assets or all of your business assets?

     All business assets 

    Podcast Guest on Show Pay Less Tax to the IRS This Year With THESE Real Estate Tax Strategies
    Kolodij Tax & Consulting
    WebsiteView Page
    0Reply
  • Kevin L.
    CA · Member since 2015 · 56 posts · 2 votes
    6y
    Originally posted by @Neel Shah:

    Hi all - here is an update.  there is no option/button to formally decline the loan on the SBA EIDL portal.  I spoke to SBA and they asked me to ignore the request, it will "go away" in 30-days. He also notated my account for SBA documentation purposes. 



    @Neel Shah: did they ask you to repay the $1K grant if you reject the loan?

    0Reply
  • Neel Shah
    OP
    Billerica, MA · Member since 2016 · 23 posts · 5 votes
    6y

    @Kevin L. No

    0Reply
  • Jon Dorsey
    Rental Property Investor · Millersville, MD · Member since 2017 · 127 posts · 44 votes
    6y

    What expenses are you paying with the loan?

    0Reply
  • Drew Vann
    Member since 2020 · 12 posts · 1 vote
    6y

    I applied early on as we had a vacation rental property in Florida that was significantly impacted by COVID-19. We had many confirmed bookings that were cancelled due to COVID-19 and had no insurance coverage for a pandemic.


    Months ago we received a $1k grant. They deposited the money and did not ask any questions or ask me to sign anything.

    Recently we received an email stating we were approved for a loan- much larger and closer to our loss but not as much as we had asked for. To be honest we are still uncertain as to the extent of the loss especially if there is a second wave. Florida has shown their government will literally ban short term rentals so we are scared.

    I  am wary of taking a government loan and have read a lot of conflicting information. In particular, I have seen it stated, and here is an example: 

    https://cameonetwork.org/wp-content/uploads/2020/03/SBA-EIL-Webinar-slides.pdf

    See slide 6.

    "EIDLs do not replace lost revenue, lost profits or fund expansion".

    Very confusing. The reason we need the EIDL is because of lost revenue (lost bookings). If I received the loan I would put the loan in a separate account and pay my mortgage, HOAs and insurance using those funds.

    With that in mind can any of you experts advise on what appears to be conflicting information?

    0Reply
  • Account Closed
    Rental Property Investor · Canton, OH · Member since 2017 · 1k+ posts · 1k+ votes
    6y

    @Natalie Kolodij

    Hi Natalie,

    You always have great input on BP so directing this question to you. Do you see any red flags with taking an unsecured loan of less than $25K? I was approved for MUCH more than this, but am reluctant as I'm constantly doing refi's on properties and don't want the secured loan to impact my ability to do that.

    I also reached out to SBA to see if they'd send me the terms and conditions (strange they aren't readily available on the website).

    C

    0Reply
  • Jerry Horn
    Member since 2020 · 1 post · 0 votes
    6y

    I agree with concerns with collateralization, but to me the bigger issue is limits on distribution of assets section: no "distributions of Borrower's assets--or make any advance, directly or indirectly by way of loan, gift, bonus or otherwise to owner, partner or employees".  So for the 30-year period of loan, an there are to be no transfers to an employee or shareholder other than salary?  That is ridiculous for a small Sub-S corporation to not be able to make supplementary distributions other than salary. Two separate CPA's share my concerns and refused to recommend loan just on these purported restrictions. 

    0Reply
  • Patrick McCandless
    Residential Real Estate Broker · Paso Robles, CA · Member since 2015 · 196 posts · 58 votes
    6y

    Is/has anyone taken this loan offer with intent to use as a replacement to hard or private money for fix and flips/BRRRR deals? Is that allowed?

    0Reply
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