Let’s start by defining what the Eviction Moratorium is and isn’t.
…The moratorium does prohibit eviction for nonpayment of rent, fees, or utility service charges.
…The moratorium does NOT prohibit all types of evictions, but it does prohibit evictions without cause.
…The moratorium does NOT allow tenants to not pay rent. It provides a grace period but tenants still must pay their rent within 6 months of the moratorium being lifted.
That’s all well and good, but what are you supposed to do while you wait for that back payment? (if it ever comes)
In response to COVID-19, the US government has added many programs that offer funding and assistance to small businesses, contractors, and those who are self-employed. And if those programs prove unhelpful, there are a few other things you can do as well.
Economic Injury Disaster Loan (EIDL)
In the Small Business Administration (SBA)’s words, “The EIDL program is designed to provide economic relief to businesses that are currently experiencing a temporary loss of revenue due to coronavirus (COVID-19).” While the EIDL Advance grant program is no longer operating, a low interest loan could help keep you afloat while you wait for repayment from tenants
SBA Express Bridge Loans
If your business already has a relationship with an SBA Express Lender, you can access up to $25,000 quickly with an Express Bride Loan! These loans, like the EIDL, are intended to help small businesses overcome temporary loss of income and to bridge the gap while applying for an EIDL.
SBA Debt Relief
If you are already the recipient of an SBA loan, good news! As part of their Debt Relief plan, the SBA will pay 6 months of principal, interest, and associated fees from the borrower’s debts.
Wondering if this applies to you? Learn more about SBA Debt Relief here.
Forbearance or Deferment
Some lenders have implemented deferral plans that allow borrowers to hold their payments for up to 120 days. Among the lenders known to have some type of plan in place are Bank of America, Ally Bank, BB&T, Fannie Mae, and Freddie Mac. Even if you don’t see your lender here, reach out to find out if they have a deferral plan in place during the pandemic.
If you have paid off a reasonable amount of the principal on your mortgages, that property equity is a significant asset you can leverage. Your options include a home equity loan or refinancing the property. Home equity loans allow you to borrow a lump sum based while a Home Equity Line of Credit (HELOC) treats your home’s equity like a credit card that you can use any amount of the credit line as needed. Refinancing replaces your current mortgage with a new one, ideally at a lower interest rate. Investopedia breaks down the pros and cons of each option here.
Ultimately, the best course of action is probably to work with your tenants and do your best to collect as much rent as possible, even if they need to make partial payments or set up payment plans. Some rent is better than no rent. Real Wealth Network has some suggestions for continuing to collect rent during the Eviction Moratorium.