UPDATE April 29, 2020, from the SBA site: “Notice: Lapse in Appropriations. SBA is unable to accept new applications at this time for the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding. Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.” We will continue to monitor the SBA site and provide updates as they become available. But for now, it appears that it’s not possible to apply.
We are closely monitoring how COVID-19 is impacting the Cape and Islands vacation rental industry and our homeowners. Although things are constantly changing, we wanted to share some information we’ve been able to gather with regard to the CARES Act.
Rental property owners MAY be able to recover some lost rental income revenue through either the EIDL (Economic Injury Disaster Loan) or the PPP (Paycheck Protection Program) portions of the CARES Act, administered by the Small Business Administration (SBA).
It is our understanding that a portion of the EIDL loan is likely to be forgiven by the SBA (up to $10,000). These loans are not tied to a bank (like the PPP program is), but instead are applied for directly on the SBA site. Your eligibility may depend upon how you’ve organized your rental business to take in rental income (e.g., if you are a sole proprietorship, etc.).
How and where to apply
Earlier, we reported: If you are interested in applying for the EIDL loan, go to the application on the SBA site: https://covid19relief.sba.gov/#/. You’ll see that on the second page of the application, there is a line for “Rental Properties (Residential and Commercial) Only – Lost Rents Due to the Disaster.” In the meantime, however, that link has become invalid. You can try the SBA site to see if it’s been updated, the application process has been resumed, and the funds have been replenished.
For more information regarding the PPP, it’s best to check with your bank to see if you are eligible.
Time may be of the essence
One other thing we’ve heard from multiple sources is that EIDL funds will be granted on a first-come, first-served basis. If vacation homeowners wait until summer, there is a strong likelihood that there will no longer be any funds available.
If you already have cancellations due to the coronavirus, it may behoove you to apply now (if you can), even if later it turns out you don’t need the funds because you were eventually able to rebook your home. And if you haven’t had any cancellations yet, you can still apply as there is no prepayment penalty on this loan. Therefore, you can simply return the funds later – although there may be a very small amount of interest due for the months you held the money.
If you are able to get any funds from either of these programs, we’d love to hear about your experience or any tips you can offer other homeowners.