Ellen McIlhenny - “The Smart and Savvy Exit – The Big Turnaround – The New Digs”
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Well, it appears to be back. Rumor has it that The SBA will increase the cap on its Covid Economic Injury Disaster Loans (EIDL) sometime this week, increasing the long term loans available to small businesses struggling during the pandemic to up to $2 million.
The cap had been set at $500,000 back in March, while the SBA was only approving only loans of $150,000 or less. The EIDL loan program again has a 30-year maturity date and loan interest terms that range from 2.75 percent for nonprofits to 3.75 percent for small businesses.
This still doesn’t mean that every business will have access. Qualification will now be based on 2019 total revenue minus cost of goods sold, less any EIDL funds already received. There still isn’t guidance on what the requirements will be regarding whether business owners need to prove economic injury. They will likely ask for 2020 numbers to demonstrate financial loss to get any kind of supplemental EIDL.
The plan to lift the cap has been in the works for weeks, but just like every other COVID relief plan, there have been delays. The revised EIDL application was supposed to come out on August 16.
It isn’t that the money has not been appropriated. As of August 19, the SBA had approved more than 3.8 million EIDL loans for around $260 billion dollars. Congress appropriated $50 billion for EIDL to support up to $367.1 billion in lending authority.
Time is running out though. First, the program is set to end at the end of this year, and second it is possible that the what’s left could be transferred to the new $1 trillion infrastructure bill, which the House is expected to pass by the end of September.
There is a chance that the SBA will loosen restrictions on what the funds can be used for. Borrowers could be able to use the money to pay off debt, including credit cards and government-backed debt. Previously, using the proceeds to pay off commercial debt was off limits
If you want to apply for these funds, keep an eye out for when they drop the application. My guess is that not everyone will be able to get to these funds. It kind of feels like it did when the original PPP funds became available. The first round of funding left out a lot of small businesses, many of those were the ones with the biggest need.
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Show Objectives - The Why
Today we will continue our discussion of my book The Big Turnaround: How bad management nearly destroyed an exceptional company. Today we will be talking about chapter 11- The New Digs. Burgess is moving and what a mess!
Then I’ll talk about another main take-away from the book – If you move your office, plan, budget, then implement.
Our “Tuesday Tip” – ABR – Always be Recruiting.
Written by Ellen McIlhenny
Owner of CFO Plus Services, a Fractional CFO services firm which also offers Back Office Bookkeeping Services. Author of the business novel The Big Turnaround; How Bad Management Nearly Destroyed an Exceptional Company. Check it out at https://thebigturnaround.com
You can connect with Ellen on any of her #cfoplusservices platforms or firstname.lastname@example.org
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