Today I got an email from the Small Business Association (SBA) asking me if I wanted to complete the process to get my share of EIDL: Economic Injury Disaster Loan. During the Shelter In Place (SIP) I was getting nervous about the economy and housing market and I decided to apply for the EIDL. I had passed up the opportunity to apply for the Paycheck Protection Plan, a window which seemed to close as quickly as it opened. While I was actively working on my business, I had the opportunity like tens of millions of other Americans to apply for unemployment. I decided against it. My year got off to a great start with four sales but my last sale was 2/13/20 and I wouldn’t sell another house until 5/22/20: an entire quarter of the year! While it’s not unusual to go without a paycheck in real estate sales for a month or even two, three plus months could have qualified as a disaster if not for my strong start to the year. Collecting unemployment was justified but I’ve never been on unemployment and even in a pandemic I didn’t want to start, especially because I felt like my business stars were aligning.
If I was going to take any assistance it would be in the form of the EIDL. I applied on May 2nd as a backup, just in case those stars became black holes. On June 19th the SBA emailed me to say my application had been approved! I was eligible for a large sum of money at a ridiculously low interest rate that I could pay back in 30 years. Because it takes money to make money, this was the business opportunity of a lifetime. I would have a month to decide if I wanted to move forward with the loan. Between then and now I had four brilliant stars come together, four houses I closed escrow on in early July. Now my year is back on track, I’ve got another house in escrow and two more coming soon!
When I read through the loan terms on June 19th it specifically stated that I would need to use the money for my business. I’m sure I still could justify taking the loan. There are a lot of expenses when you sell homes. Plus it would be nice to put a large cushion in the bank, just in case. California like most of the nation is having a difficult time with the virus, and it wouldn’t surprise me to see another lockdown in various counties including in the Bay Area again. Would another SIP set me up for another 13 weeks without a sale? It could happen.
So why not take the money? At this point in the year I’m doing well. I no longer feel like I need the money. If I received the money my plan would be to stash it in the bank, and if I don’t eventually need it my plan would be to invest it in the stock market when the market goes down again. Or I could use it to purchase an investment property. I am certain I could make a lot of money with that money if I don’t need it for my primary business of selling homes. The smart business decision is to take the money. At this point the government is basically just printing money and giving it away to people who fill out the right forms at the right time, so why not take the loan?
The ethical thing is to decline it. I would be taking the money to further my business interests, not survive these economic Corona calamity. After all, it is the Economic Disaster Injury Loan, not the Take My Business to the Next Level Loan. Honestly I really want the money and the additional security it could bring me. But I’m going to take my chances and pass up this once in a golden opportunity. Hopefully the SBA will be able to give that money to someone who truly needs it.
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