If you reported any business income on your 2019 taxes—either as a corporation or a sole proprietor or independent contractor—and have not yet applied for EIDL, or didn’t apply for an increase if you already got some EIDL, now is the time to apply and get the money you need to grow your law practice into a business. EIDL is the 3.75% payable over 30 years loan program available to business owners in the US.
3 Things Entrepreneurial Lawyers Should Keep in Mind About the EIDL
As an Entrepreneurial Lawyer, we know you want to grow your law practice. One thing we know for sure is that to grow your law practice, you must invest money to do it. And EIDL money is the cheapest money you’ll ever find to grow your law practice into a business you love. If you are thinking to yourself that you don’t want to take on debt to grow your law practice, it could be worth asking whether that kind of thinking is holding you back from turning your law practice into a business.
One of our members recently asked: “I don’t really NEED the money to grow my practice. I’m making money, and choosing the slow and steady path rather than taking on debt. Should I apply for EIDL? How would I use it, if I do?”
After doing some coaching with her, we saw that actually she really COULD use this money to free up her time, significantly. Sure, slow and steady could work, but that means she’ll have to wait to hire a Client Services Director (a key role in her office) until she has so much work coming in that she cannot handle it on her own. By that point, she’ll be behind the 8-ball on training her Client Services Director, and it will be far more difficult for her to manage her time, educate her community, engage and serve all the clients, AND find, hire and train a new team member well.
This is how lawyers get in trouble in their business, and can even find it very hard to dig themselves out of a hole of too much work, not enough time, and then quickly hiring the wrong people, only to cost them more time and money, and never able to get ahead. This is not the path to success.
Instead, what she should do is receive the EIDL funding, and hire her Client Services Director while she still has some space to find, hire and train a great one to prepare for the client flow to come. This is how you build a business you love.
Convinced that the EIDL could help you build your law practice into a business? Here’s a 3-minute read that’ll provide you with a quick rundown on what to keep in mind when you’re assessing this potential loan opportunity.
The First Thing to Keep in Mind
It’s an easy loan application process with notable advantages and benefits.
Oftentimes, the only thing more daunting than contemplating applying for a loan is actually applying for the loan. In the case of the EIDL loan, one of the distinct advantages is the application process itself. It’s easy. Plus it’ll take you about two hours to apply for COVID Relief EIDL Funding, so it’s a relatively minimal time commitment.
Other clear advantages of the EIDL loan include the fact that not only is the application process easy, but it has a low interest rate (3.75% interest rate for small businesses), includes excellent terms, and offers flexible, long-term repayment options (30-year fixed interest rate).
And along those process lines, it’s a relatively short processing timeline – approximately 21 days – so you’ll know pretty quickly whether this is a “go” or “no go” for your fiscal planning purposes.
While you can apply for an EIDL loan only once, as of April 6, 2021, the maximum amount was raised to $500,000 and as of October 8, 2021, that amount will raise to $2,000,000. All of that to say, even if you got some funding during the first release of funds, you should consider whether now is the time to apply for more.
Another change is that your EIDL loan can now be used as working capital or to pay off other high-interest debt, not just for emergency expenses. So, if you were concerned about applying before because you weren’t sure how to use the funds, now you don’t need to worry—you can use the funds to grow your law practice.
Do not wait for the SBA to contact you about these increases, login to your loan portal and click the button that says “Request More Funds” to apply for your increase. Or go here to start your application, if you didn’t already apply.
Additional advantages are outlined in the new COVID EIDL policy changes and updates that took effect on September 8, 2021, which includes information about the increased use of funds flexibility, the automatic deferment of 24 months from the loan origination date, and simplification of affiliation rules for all industries.
The Second Thing to Keep in Mind
It’s an easy process to determine if you’re eligible with distinct parameters set forth.
While the best way to determine if you’re eligible is to fill out an application, checking off all of the items on this list will give you a running start at determining whether you should view EIDL funding as a “green light” opportunity in funding your law practice.
- are a small business owner, or individual operating as a sole proprietorship, or an independent contractor.
- were in operation on or before January 31, 2020 (and filed 2019 taxes).
- have fewer than 500 employees.
- aren’t on the list of prohibited businesses (lobbying, illegal activities).
- haven’t applied for EIDL funds before (or are now applying for an increase).
- are physically located in the United States or designated territory.
- have suffered working capital losses due to the Coronavirus pandemic.
The Third Thing to Keep in Mind
It’s an easy process to determine what you can spend the money on with clearly outlined guidelines.
You may not have applied for an EIDL loan yet because you thought it was pretty unlikely the funds would cover what you need to build your business, but the actual list representing inclusions and exclusions may surprise you.
In a handy little box entitled “Use of Proceeds” on the first page of the SBA’s updated COVID EIDL Loans Information, you will see that this loan can be used for “Working capital to make regular payments for operating expenses, including payroll, rent/mortgage, utilities, and other ordinary business expenses, and to pay business debt incurred at any time (past present or future).”
There you go! After reading this brief overview about the Economic Injury Disaster Loan, you should have a pretty good idea about whether you should apply for this loan. It can be your early Christmas gift to yourself, and to your law practice. If you qualify for EIDL, you don’t need to struggle to find the money to grow your law practice.