The SBA made it very easy for practice owners to receive an EIDL loan of up to $150k with a fixed 3.75% interest rate over a 30-year term. And a lot of practice owners decided to accept this EIDL loan.
As we posted last month at: https://www.schwartzaccountants.com/2020/05/more-info-about-eidls/, there are various pitfalls that come along with this SBA loan. For starters, the sole purpose of the EIDL loan is to help businesses survive through an Economic Injury or Disaster. The instructions issued by the SBA specifically prohibit many other uses of EIDL funds including:
- Paying dividends or bonuses
- Expanding your facility
- Purchasing equipment
- Relocating your practice
Please note that the healthcare lending community isn’t very keen on these loans either, since having an EIDL makes it more difficult for you to refinance your existing practice debt to another lender.
If you took the EIDL loan, please consider paying off the EIDL once your practice returns to pre-Covid profitability and you are almost 100% certain that you won’t rely on these funds in the future. To repay the EIDL loan:
- Go to the website: pay.gov
- Create a new account (Choose “Create Company Account”)
- Once account is created, you will need your EIDL loan number
- After completing the set-up, you can pay back your loan either in full or by partial payments