Small businesses suffering financial hardships due to COVID-19, including the rental housing industry and companies that serve that industry, will soon get another chance to obtain loans under the federal government’s Paycheck Protection Program, or PPP, and the Economic Injury Disaster Loan Program.
Congress on Thursday approved a $484 billion stimulus plan that includes about $380 billion to replenish the PPP, which ran out of money last week, just days after its debut.
The PPP aims to help businesses with 500 or fewer employees, including sole proprietors, independent contractors and people who are self-employed, by providing a forgivable loan of up to 2.5 times average monthly payroll costs. Some landlords, however, may not qualify for the PPP.
Because of pre-existing rules, the Small Business Administration doesn’t normally loan money to landlords. This is because the government considers rental properties to be “passive businesses” that do not produce a product or service, and passive businesses are ineligible for SBA loans.
In these cases, property owners may want to apply for an Economic Injury Disaster Loan, which provides up to $2 million of capital for certain business expenses. Although these loans are not forgivable, businesses that apply for them can also request a grant for up to $10,000 that can be available within 3 days of applying. The package Congress approved on Thursday includes an additional $60 billion for these loans and grants.