PPP and EIDL’s Impact on Business

If you own or run a business, when you think about COVID’s effect on your business, the perspective is really about the effect of any PPP money you received and/or any additional financing you needed/need after receiving an EIDL (Economic Injury Disaster Loans).

These two stimulus programs (PPP – a short-term fix; EIDL – for the long-term) affect businesses in different ways. PPP money enabled many businesses to keep their doors open during a very difficult time (with pay-back waived). EIDL, on the other hand, is a secured, 30-year, low interest rate loan which is fine until borrowers need more availability at which time the loan becomes extremely cumbersome.

Many EIDL borrowers don’t realize that EIDL have a cap on borrowing. When EIDL-holders want or need to change lenders to borrow more funds, EIDL need to be subordinated and that’s going to take a while.

EIDL subordinations can take weeks to months to be approved which means the timeline on obtaining new financing is extended. More time equates to borrowers not having access to the money they need to run their businesses.

All that being said, if you have an EIDL, and you anticipate needing additional capital, don’t wait to start talking with a lender who understands the subordination process; but be prepared to wait for the subordination to be approved.

If you don’t have an EIDL, while the low interest rate is very attractive, make sure you understand the sufficiency (or insufficiency) of those funds and what that means if and when you need more money. Knowledge is always power.

We are very experienced with EIDL loan subordinations. If you have an EIDL and need additional capital, we’d be happy to help. For more information, contact Mark Hafner at mhafner@celticcapital.com.

About Celtic Capital
Companies looking for working capital to cover operating expenses, fund growth, increase buying power and take advantage of vendor discounts and rebates turn to Celtic Capital. With an appetite for the more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset based financing solutions from $500,000 to $5 million with no financial covenants.

As an independent lender, working with companies nationwide, Celtic Capital is willing and able to alter price and deal structure and expand lines of credit to handle its clients’ increased revenues; and when cash flow is an issue, will look toward providing an inventory facility to help offset lost cash flow.

If you know of, or are, a business in need of non-traditional financing, contact Mark Hafner at 800.742.0733 or mhafner@celticcapital.com, or visit us at www.celticcapital.com.