If you have an Economic Injury Disaster Loan (EIDL), you should know…
I received another question on the Economic Injury Disaster Loan (EIDL) last week and the child care business owner asked me to share my thoughts here since they could be useful to many of you.
I often ask people “what keeps them up at night”- it’s a great way to cut through minor worries and concerns. When people pose that question to me, I say it’s the EIDL.
The EIDL was a loan provided throughout the pandemic. It was long term debt with a relatively low interest rate intended to help businesses get back on their feet.
And for many businesses, it did help.
But for others, it is becoming a weight on their recovery. I think the issues are twofold.
First, many providers I have talked to around the U.S. honestly thought it was a forgivable loan. It was pushed at the same times as the Paycheck Protection Program Loan (which was forgivable) and many providers received EIDL Advances of $10,000-$15,000 that were forgiven. But the main loan itself is not forgivable. Further, some providers have thought the grace period on repaying the loans (up to 36 months) was without interest. One family care provider I talked to recently did not understand that she had already accumulated an additional $7,000 in interest since she took the loan.
Second, child care, especially family child care, has tight profit margins. The hope was that after a recovery, businesses would be thriving and could more easily pay back the loans. But now, we see inflation, a slow return to child care for families, increases in the cost of labor, and, most of all, generous stimulus programs that are ending within 12 months.
Even with the current stabilization funds, many providers I know are already struggling and having difficulties making payments on the EIDL.
Sadly, there is no effort currently to have any sort of EIDL forgiveness program. I have talked to a number of US Representative and Senator’s offices, but their basic response is that they aren’t hearing the story that many of you have shared with me – that this debt may put you out of business.
What I suggested to the provider who emailed me is what I suggest to you: call your representatives. Let them know the impact it is having on your business and how this may forestall our nation’s economic recovery, which is dependent upon the supply of child care.
To find and contact your U.S. Senator:
Visit the Senate website (www.senate.gov).
Conduct a search using the Find Your Senators pull-down menu in the upper right corner (select your state and click Go).
On the results page is a link to the Senators’ website, contact information, and links to an online contact form (forms vary by Senator).
To find and contact your U.S. Representative:
Visit the House of Representatives website (www.house.gov).
Conduct a search using the Find Your Representative zip code search box in the upper right corner (enter your zip code and click Go).
Photo by Andrea Piacquadio via Pexels.
