How Landlords Can Get A Small Business Loan From The Coronavirus CARES Act

The federal government passed the CARES Act on March 27, 2020, which provides a whopping 2 trillion dollars of economic stimulus to the US economy in response to the Coronavirus (COVID-19) pandemic to expand an earlier stimulus package.  Included in the legislation are loans, some portion of which may be forgivable under certain circumstances, to help small businesses survive the widespread shut-downs and associated economic fallout. Property management companies and small-scale landlord operations that manage Chicago apartments are likely eligible if renters have delayed rent payments or skipped them altogether. Every landlord operation is different, and each landlord should consider whether SBA disaster loans, CARES loans, or state or local programs are suitable for to their own needs.

Can Landlords Apply for SBA Disaster Relief Funds from the Federal Government?

Some landlords of Chicago apartments are faced with the unprecedented dilemma of coping with multiple tenants who can’t afford to make rent payments at the same time. While there’s no script for dealing with this uncertainty in the economy and how it affects the bottom line for apartment managers, at least there’s some relief coming in the form of low-interest loans through the Economic Injury Disaster Loan Program under Section 7(b) of the Small Business Act. Landlords can use these funds to cover shortfalls in rent collection in occupied apartments and pay down their own obligations. For landlords who apply for new loans under the Paycheck Protection program, for example, the CARES Act provides for some loan forgiveness for payroll costs, payments of interest on mortgage loans incurred prior to February 15, 2020, and payment on utilities for services that began prior to February 15, 2020. Loans will not be forgiven, however, if the landlord does not retain employees.

Additionally, Economic Injury and Disaster Loans and Loan Advances are also available through the SBA for business owners in Illinois suffering from temporary losses of revenue. Additionally, the SBA Debt Relief program offers payment of principal and interest on new loans issued prior to September 27, 2020, for a period of six months. Of the many options available, one might be suitable to your landlord operation.

How Can Apartment Management Companies and Landlords Apply for SBA Disaster Loans?

Landlords and property managers looking for relief for from the Small Business Administration will need to apply for these disaster relief funds. Some Chicago apartment landlords might opt to apply to commercial banks for lines of credit or other products apart from the SBA programs, however. Like all lenders, the SBA will evaluate the creditworthiness of your operation before extending funds. To apply, be sure to have balance sheets and profit and loss statements (prior year and current), proof of an ability to repay the loan, perhaps by looking at historical cash flow, details about the number of employees on payroll, evidence of economic impact of coronavirus (if applying for disaster relief), and more.

Loan officers are considering that the grants are on a first come, first served basis, so business owners might want to get started as soon as possible. Filing online is likely the easiest and fastest way to apply. The instructions and the forms required for loan applications can be found on the SBA’s website and more info on disaster relief funds are there as well.

More Resources for Landlords in the Wake of Coronavirus (COVID-19)

My Tenant Asked to Skip or Delay Rent Payment. What Next?
How Landlords & Agents Can Schedule Virtual Apartment Tours

Domu is not purporting to offer legal or financial advice to you or anyone. Domu makes no representation about the value of the SBA offerings.