Can You Use Student Loans For Rent – Attorney Explains Landlords are Eligible for EIDL Loans & Grants
Can You Use Student Loans For Rent – Review
Although few landlords are aware of this, landlords are eligible to receive EIDL grants and loans from the Small Business Administration. Find out the details in this video!
DISCLAIMER: please note that the information contained in this video is for educational and entertainment purposes only. You should always consult your own attorney and your own financial and tax advisors before making any legal or financial decisions. This video is not intended to and does not create any attorney-client relationship between the content creator and the viewer. The views and opinions expressed in this video belong solely to the creator and do not reflect those of his law firm or any of his business partners.
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The complete EIDL playlist:https://www.youtube.com/playlist?list=PLfDCjb-_0b5YmTKJ0QWdsPTspmbceQvKY
SBA EIDL application portal link:https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/covid-19-economic-injury-disaster-loans#section-header-8
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VIDEO TIME STAMPS (click to skip to the part you want to see):
2:16 – EIDL program as it applies to landlords.
2:30 – Are landlords eligible for EIDL?
3:01 – Who is eligible for an EIDL loan? “Eliglbe Entity” defined.
3:39 – Other eligibility requirements for EIDL loans.
4:19 – Requirement that applicant must have suffered an economic injury.
4:52 – Loan amount limits.
5:47 – Other loan terms (repayment term, interest rate, personal guaranty etc.)
6:38 – Collateral.
7:20 – Overview of EIDL grants.
8:15 – New stimulus act reopening the EIDL grant program.
8:35 – $10,000 EIDL grant eligibility under Section 331.
8:47 – Definition of a “covered entity.”
9:16 – “Low Income Community” definition – rental property address or landlord’s home address?
9:44 – $10,000 EIDL grant eligibility under Section 332.
10:55 – How do landlords apply for the EIDL program?
11:21 – When will the EIDL grant portal reopen?
11:48 – Final thoughts for landlords.
Are landlords/rental property owners eligible for EIDL loans and/or grants? Yes! The Small Business Administration (“SBA”) had stated in their guidance early on that “owners of rental property” are considered small businesses for purposes of EIDL eligibility. I personally know several landlords who were successful in obtaining EIDL grants and loans in the summer of 2020 when the program was first rolled out.
In order to be eligible for a loan under the EIDL program, an applicant must be an “eligible entity” within the meaning of the CARES Act. An “eligible entity” includes (as relevant for our discussion):
– A business with fewer than 500 employees;
– Any individual who operates under a sole proprietorship, with or without employees, or as an independent contractor.
An LLC or a corporation that owns a rental property or properties would qualify as a “small business” as long as it has fewer than 500 employees. An individual who owns a rental property or properties in his or her name would qualify, regardless of employees.
The “eligible entity” must have suffered an economic injury as a result of the pandemic and/or the government response to the pandemic. The SBA has indicated that it considers a borrower to have suffered an economic injury if the borrower was unable to meet its ordinary expense obligations as they came due. Tenants being unable to pay rent and the landlord being unable to recover the property because of eviction bans would certainly qualify in my view.
During the initial rollout of the EIDL program, the loans appeared to be based on the amount of lost income that the borrower reported on the application. More recently, the SBA’s position has been that they will provide for up to 6 months of the business’s operational expenses with an overall cap of $150,000. For landlords, operational expenses would include all of the property’s expenses (mortgage, taxes, utilities, repairs, maintenance, etc.).
– 30-year repayment/amortization term
– 3.75% interest rate (2.75% for non-profit organizations)
– Payments can be deferred for up to 1 year (but interest accrues)
– Where the borrower is an entity (e.g. an LLC or a corporation), no personal guarantees are required for any loans below $200,000
– Loans over $25,000 require the borrower to agree to let the SBA create a blanket lien against all of the borrower’s assets as “collateral” (except for real estate)