Aug 11, 2020
Due to today's unstable economic climate, one thing you can expect is that your business may struggle. Many reasons can cause these problems, but the end is almost always the same. Either your business survives to see another day, or you don't. This is why you should take every advantage you can get. One of these is the Small Business Administration Economic Injury Disaster Loans.
What The Small Business Administration Economic Injury Disaster Loans Can Do For You
Personal Guarantees and Security Interests Have Been Waived
Personal guarantees can be a significant issue for business owners. If your business goes bankrupt and you signed a personal guarantee for a loan, you are still liable to pay for the loan despite the business no longer existing. In essence, you are a co-signer to your business in that situation. However, personal guarantees and security interests used in the Economic Injury Disaster Loan are now completely waived thanks to an act of congress.
Think about that. The government is removing the personal guarantee part of a $200,000 loan. This means that if you do go out of business, and you still haven't paid back the loan. The government can't file a lien on any of your personal belongings.
All Idle Loans Like the EIDLs Are 30 Year Payouts
One of the most significant issues with getting an SBA loan for most people is that you do not have enough time to pay it back. This can be a cause for concern if you're taking a regular SBA loan. A regular SBA loan will need you to pay within 7 to 10 years, depending on the loan. However, idle loans like the Economic Injury Disaster Loan can be paid within 30 years. That's 3 times as long as a standard loan.
It Can Go Through at Lightning Speed at a Miniscule Interest Rate
When you get a regular loan from the SBA, you typically have to go through a dozen hoops to get the loan. The interest rates for most standard SBA loans also reach up to 8%. This is not the case for the Economic Injury Disaster Loan as we've had clients who have taken this loan, and the process has gone at lightning speed. The interest rates are also more than half the standard at 3.75%
Key Takeaways
● When people think SBA loans, they think, "oh my god, it's going to be a pain, it's going to take four months, and it's death by a thousand cuts. Not true with these idle ones.
● If they weren't waiving the personal guarantees, it would still be a great deal. But the fact that they're waiving the personal guarantees is just amazing.
● Never in the history of business has small businesses been in a position to borrow those sums of money with those kinds of terms