It is true that SBA is no longer accepting applications for either the PPP or EIDL loans. If you haven’t received approval for either of these, it doesn’t mean all hope is lost so please don’t despair. There are still resources that may be available.
PPP
- Some PPP applications have actually been approved but the practice not yet notified. That means if you got your application submitted but haven’t heard back, there is still a chance this will come through for you. Consider reaching out to your bank to ask where you are in the queue.
EIDL
- SBA indicates on its website that these loans are still being processed on a first come first serve basis. This implies the program has been frozen to new applicants based on projected approvals. That means there is still a chance this loan will come through for you, and possibly the advance as well.
RETIREMENT LOAN
- You and/or your spouse can take a loan from your retirement plan (ie 401K, SEPP, IRA) up to $100K. Payments are deferred for one year and then repaid over 5 years. The interest rate is prime plus 1%. Loan repayments are typically made as deductions to your paycheck. To the extent the loan is repaid, there is no taxable income generated from this transaction.
RETIREMENT DISTRIBUTION
- The CARES Act included a provision for a CRD (COVID-19 Related Distribution) that allows for a distribution from your retirement plan (ie 401K, SEPP, IRA) of up to $100K. Again, you and/or your spouse could utilize this program. The distribution would be exempt from the 10% early distribution penalty. In addition, if you recontribute the distribution within 3 years of receiving it, there is no tax generated from the transaction. If not repaid, it will be included in income ratably over a 3 year period and ordinary tax paid.
ADDITIONAL GOVERNMENT RELIEF
- Talks are currently underway to add funding to SBA which would expand or supplement the current program. This is currently bogged down by politics but hopes are set for something to be passed by the end of the month.
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