Categories: Business Tips |
On Monday, July 13, the Small Business Administration announced the full allocation of the $20 billion authorized by Congress for the EIDL Advance Program, which allowed small businesses and nonprofits to obtain an up to $10,000 interim advance while applicants waited to receive loan funds.
While the EIDL Advance is no longer available, please note it is worth looking into the loan. Yes, it is a loan, and yes, you will have to pay it back. However, the interest rates are at 3.75% for small businesses and 2.75% for qualifying nonprofits, and the repayment terms are up to 30 years. Considering the uncertainty of the recovery timeline, this infusion of working capital can make a difference for a lot of small businesses.
Let’s be frank for a moment: if your business was not doing well or had declining sales before COVID-19, it wouldn’t make good financial sense to take on additional debt with all the unknowns. With the EIDL guarantee of $25,000, some businesses may have to ask some hard questions about their viability going forward.
Rather than taking on new debt at this precarious time, we suggest you take full stock of your business plan. Is there another way to sell your product or service that would appeal to your customers during this period of no-touch transactions and social distancing? Have you tracked what is and isn’t selling from your product line? Based on that data, it may be worth pivoting, or in some cases changing your entire business model. Adaptation is often the key to survival.
If your business was doing well and you find yourself making headway as various industries have been allowed to reopen, you may want to consider the working capital infusion the EIDL loan offers. Because of its flexibility, you can use the EIDL loan to support recovery of lost inventory, invest in personal protective equipment and other measures to keep employees and customers safe, or even to support payroll as Paycheck Protection Program funds run out.
We are here to help. If you are unsure of which direction may be best for you at this time, please reach out. Whether it is to make a tough decision or to figure out your path forward, our team of advisors is ready to assist you in evaluating your choices and supporting you along the way.
Contact us today for no-cost advising.
Visit the SBA website to learn more about EIDL and how to applyGo Back