Eligibility for EIDL Economic Injury Disaster Loans and PPP Loans

Eligibility for EIDL Economic Injury Disaster Loans and PPP Loans

Jon S.Pro Member
Investor · Tampa, FL · Member since 2015 · 530 posts · 92 votes

Am I eligible for either SBA program loan? 

Background: Out of 9 doors, I have 6 doors occupied with LT leases, 1 door ready but vacant, and a 2-door renovation nearly complete, which will be available to rent in a week or so. 

I am structured as an multi-member LLC partnership with my spouse. I have no W2 employees, and all the 1099 income I paid was to independent contractors who did work on my properties, but they do not have an employee employer relationship with me.

My business tax return for the LLC is filed as passive income, since my income is derived from rental income.

For April, I collected 91% of rents. All but one tenant paid their full rent. The one tenant paid half his rent and asked that the other half be taken from his deposit, to which I agreed with the understanding he replaces the last month rent deposit at some future date when he goes back to work.  

I'm expecting May or June to possibly have fewer tenants able to pay their rent. I'm hopeful that is not the case, but it seems like a clear possibility. 

I have mortgages on all my properties, which were all BRRRR properties financed for as much as I could obtain - 75-80% of ARV - after they were renovated, so I definitely still have mortgages to pay.

I also continue repairs and maintenance on properties, as well as taxes, insurance and property management fees, for those few doors that I assigned to a PM. 

I have some utility bills for the vacant and under renovation properties. 

I have storage rent expense for business equipment. 

I have online services, ie, cloud subscriptions. 

I have accounting fees. 

I don't pay myself or my wife any salary, my business tax return claims a profit or loss, and that is my taxable business income for the year, which this past year of 2019 had a slight loss, while 2018 had a small profit.

So I have no payroll, just 1099's to independent subcontractors who do not work for me on a regular basis.

And I have no payroll to ourselves. 

But I am at risk of economic injury. 

And I have suffered the economic injury of my renovation being slowed by at least a month, due to the city closing its city building and permitting offices, and the injury of losing the opportunity to flip this property at a small profit. The virus made it impossible for me to flip this house, as loans and buyers are afraid to buy, so I would take a haircut, ie, there would be no profit in flipping, it might break even, and that would mean a waste of a year of my time. So the alternative is to plow forward to finish the 2nd door, and to get them both rented, but there are economic injury costs associated in this choice too.  But how would i show such injury,  I doubt I could, as it would probably fall under investor risk?

And I can't know the full extent of that actual injury until May or June or July, right? I can only guess a potential worst case scenario where none of the tenants paid rents? 

Meanwhile, once the SBA gets these loans funded again, there won't be time to actually experience any economic injury, as there will probably be 1 day or less to apply, before funds run out again, so if I'm eligible I would have to base the numbers on a negative worst case forecast. Otherwise, there won't be any funds left if I wait and see how it goes. 

Any solutions? More importantly, do I have any any eligibility? 

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  • Whitney HuttenPro Member
    Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
    6y

    @Jon S. I would call your CPA and ask.  The provisions are changing almost by the minute.  I've been advised that I'm eligible and have applied.  I've am also working on the two other ways for funds which is the net operating loss carryback provision and the $100K 401K loan/withdrawal.

    This is also a general comment... be warry of scammers!  If you are posting on an open forum you are looking for a SBA loan, I can almost guarantee you will get calls from people posing as the SBA (I received 3 last week). 

  • Jon S.Pro Member
    OP
    Investor · Tampa, FL · Member since 2015 · 530 posts · 92 votes
    6y

    @Whitney Hutten

    Thank you Whitney for the heads up on scam calls. I’ll definitely watch out. Good luck on getting funded.

  • Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes
    6y

    @Jon S. Hi Jon, do you have a status update?

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