If Your Small Business Is Having Trouble Paying Back Loans, It’s Time to Speak With Denver Bankruptcy Lawyer Wink & Wink
The COVID-19 pandemic has created many challenges for small businesses in Colorado.
Perhaps you own a restaurant or shop in Aurora that saw foot traffic disappear. Or maybe your small business in Northglenn wasn’t able to make revenue thanks to online orders or things like curbside pickup.
Whatever the case, you may have needed some help and applied for, and got a COVID-19 Economic Injury Disaster Loan (EIDL) from the Small Business Administration (SBA).
While this may have sustained your business for some time longer, it may not be enough. You may still be wondering how you can repay your ever-increasing debt. Is small business bankruptcy a smart choice if the debt is becoming too great and you can’t see a responsible way out?
First, let’s look at some details about EIDLs.
What Is an EIDL?
The U.S. government recognized that many small businesses were hurting from the effects of COVID-19. The COVID-19 EIDL program from the SBA provided loans to these businesses to hopefully keep them going and help get them through a rough period.
Here are some facts about the EIDL:
- Provides a maximum loan of $2 million.
- If you were initially approved for a lower amount, you can still possibly apply for an increase up to the maximum.
- Has a fixed interest rate:
- Businesses: 3.75%
- Private nonprofit organizations: 2.75%
- Has a loan term of 30 years.
- Payments are deferred for the first two years. Keep in mind that interest will still accrue, though no payments will be required. You will then be required to pay principal and interest for the remaining 28 years of the 30-year term.
- The EIDL program stopped accepting new applicants beginning January 1, 2022.
For additional help with EIDLs, the following resources are recommended.
- Small Business Administration: Manage Your EIDL.
- Small Business Administration: FAQ Regarding COVID-19 EIDL.
What If Your Small Business Is Having Trouble Paying Back the Loans?
Once the two-year deferment is over, you’ll be expected to begin making payments toward the principal and the interest that has accrued. Remember, interest accrues the second you receive the loan, so you will have incurred possibly two years of interest by the time you start paying back the loan.
For some small businesses, paying back the EIDL may be challenging.
Maybe business never picked up again, or other debts cropped up or just spiraled out of control.
Maybe your music equipment store in Westminster has seen fewer and fewer customers come in for trumpets or guitars.
Or maybe your flower shop in Thornton has lost further business to a competitor, and your debt is just growing and growing with no end in sight.
If that’s the case, it may be time to speak with a Denver bankruptcy attorney, such as Wink & Wink. They can review your situation and see if small business bankruptcy might make sense for you. And they don’t just help small businesses located in Denver either. No, they serve small businesses in the surrounding towns too.
Small Business Bankruptcy
Filing for bankruptcy for your small business doesn’t mean you’re ruined or can never start a thriving business again someday. Hardly.
In fact, small business bankruptcy may be the thing to help you eliminate much of your debt and get a fresh start in your financial life.
The good news also is that most SBA loans can be discharged through bankruptcy. While bankruptcy will require you to still pay back things like student loans and alimony or child support, as well as some other kinds of loans, SBA loans can usually be discharged when you file for bankruptcy. And, under Colorado law, the owner of a small business can claim up to $60,000 worth of business assets to keep after filing bankruptcy. This can provide some much-needed debt relief for small businesses that have acquired too much debt or financial hardship to succeed.
Is Personal Bankruptcy the Best Option?
If your small business is a corporation or LLC, it can file for bankruptcy. However, this will not remove any personal liability you have for contracts, guaranteed business leases, or other kinds of debt.
For example, when you signed a lease for a commercial space or got a business credit card, you likely had to provide a personal guarantee. If you get behind on payments, creditors could go after you personally to collect on these debts you owe them even if your corporation or LLC filed bankruptcy.
That’s why a personal bankruptcy may be the best option for you and your small business.
Small business bankruptcies can be very challenging. That’s why it’s crucial you speak with a skilled bankruptcy attorney, such as Wink & Wink of Colorado who’ve helped many small business owners get help. They can review your business’s financial situation and help you determine the best steps so you can get much-needed debt relief without making things worse.
Speak With a Denver Bankruptcy Lawyer Today
If your small business received a COVID-19 EIDL but is having trouble paying it back, it’s time to call Wink & Wink, a bankruptcy law firm serving the greater Denver area. They can review your financial situation and see if small business bankruptcy makes sense for you. Plus, the initial consultation is completely free. Contact Wink & Wink online or call us today at (303) 410-1720 to get started.