Hey Newsies,
Today we’re looking at an article from the Associated Press (AP) reporting on the businesses that are still struggling to pay off loans taken out during the COVID pandemic. I’d love to hear your thoughts and experiences on this!
AP News: COVID-19 government disaster loans saved businesses, but saddled survivors with debt
The article states that small businesses that haven’t paid off the loans they took out during the COVID-19 pandemic may be in worse shape now than others. In 2020, the US Government’s Small Business Association (SBA) set up the Economic Injury Disaster Loans (EIDL) as one of the many programs to help struggling businesses. These are low interest loans, with a 30-year term and 3.5% interest rate, which could help businesses in need pay their operating expenses when income was low.
While these loans provided a much needed lifeline to businesses that would have otherwise closed down under the pressure of the time, four years later many are still struggling to pay off the loan and remain saddled with debt. This debt can be an immense strain on a business, both financially and mentally, feeling like an impossible task to pay off. Having an outstanding debt like this can also make a business be denied for other lines of credit.
In my shop, we were considering taking an EIDL loan, but we were hesitant to take on more debt, so we decided to wait a bit to figure things out and see what our options were. In the end, we didn’t take an EIDL loan, but received one of the SBA forgivable loans which would turn into a grant based on qualifying expenses. Luckily we were able to go through the forgiveness process and were approved, and ended up not having to pay back any of the money received. This money was absolutely part of what kept us going as a business, saving us and enabling us to stay in business through those difficult times. If we had taken out a regular loan, even at a low interest rate, it would have taken us a tremendous amount of time in order to pay it back, and we may absolutely have been like one of the subjects of this article and survey.
What’s your perspective:
- Did you take out any loans taken during the COVID pandemic? Why or why not?
- If you paid yours off: what strategies did you use to finish it?
- If you still have debt: how are you planning on paying it off? What effect is it having your business?
Can’t wait to hear your thoughts!
Pesso
This article is for informational purposes and does not constitute legal advice. For guidance or advice specific to your business, you should consult with a qualified legal professional.
