Here is a brief updated for today, Monday April 6, regarding the EIDL and the 7a loan:
Economic Injury Disaster Loan and $10,000 Advance Grant
- As of today, we have only one client (yes, 1) that received either the $10,000 grant and none that have received the EID loan. A few clients that filled out the application early are in communication with the SBA, but have not received funds. If you have, please notify us. We’d be interested to know.
- We suspect many will begin to receive the $10,000 advance grant in the next two weeks. However, with the incredibly high volume of applications, we can’t predict when the EID loans will fund.
- This past Friday, April 3, the SBA allowed banks to begin taking applications for the 7a loan. However, most banks have not determined how, if, or when they intend to roll this out. As a result, most banks are not taking applications yet. They are, however, taking inquiries using a template application provided by the US Treasury and SBA. Many applicants are confusing that inquiry as the formal application. From our understanding, it is not. Since the US Treasury Department didn’t finalize rules until Thursday night, less than 24 hours before going live, most banks will likely need a few days before they are officially prepared to accept applications. Please be in constant communication with your banker to know when the application will be ready.
- Most banks are only working with existing clients. It’s highly likely you’ll need to work directly with your existing lender to apply for a 7a loan.
- Over the weekend, Wells Fargo, opened up a formal application process. Before Monday morning, they closed it down, stating that due the exceptionally high volume of requests, they will not be taking any further applications. We believe this is largely a ploy by Wells Fargo to force the Fed to lift a cap imposed on them after establishing millions of phony accounts back in 2018. We don't know if or when they may resume taking applications.
- Most banks, such as Citibank, said Sunday night that although they are not ready to take applications, when they do, they will accept them through June 30th.
- We can’t forecast the outcome of this unusual situation. We have generally encouraged clients to wait to apply, allowing them to receive the funds closer to the time they reopen their office. Doing so would allow for a full forgiveness of the loan if they fully re-engage their staff. However, we also agree that the chances of borrowers receiving 7a funds is likely higher to early applicants. It may be a better decision to apply now and hope that (1) the receipt of funds is, or can be, delayed until they reopen their office or (2) the eight weeks (the time loan forgiveness is measured) starts on the later of the date of receiving funds or reopening your office.
- PracticeCFO is working aggressively to submit applications for those that have requested us to do so on their behalf (clients only). Keep in mind, that we are limited by the readiness of the bank. If you would like us to complete this, but have not made the request, you may do so here.
- If this process seems haphazard, it’s not just you thinking that. The banks are in lagging and the law itself is vague and being interpreted differently by the U.S. Treasury, leading to a “fire-ready-aim” rollout approach to this program. We’ll do our best to keep you informed as this situation evolves.
- The last couple days, there has been a lot of concern that borrowers who receive the EIDL after April 3rd cannot apply for the 7a loan. This confusion has resulted from a misinterpretation of the SBA’s “Interim Final Rule” that came out April 2nd. We strongly believe this is incorrect, and that you can apply for both. The Interim Final Rule was simply stating that if you received an EIDL before April 3rd, and used it to cover payroll, it must be refinanced into the 7a loan. If it wasn’t used for payroll, than it doesn’t need to be refinanced into the 7a loan. There is no language that prevents an EIDL borrower from applying for and receiving a 7a loan.