These are the most difficult times many of us have experienced in the vacation rental world. While none of us could have imagined a time such as now, we must remain optimistic and work together to bridge this gap so we may continue the unprecedented growth of the short-term rental industry.
So, right now, what are your options?
As members of the vacation rental community, we have received many questions and we are working to bring critical information to you, our clients and fellow short-term rental hosts, to help weather this time and maintain a healthy operating business.
We will continue to update this list as we learn more. For now, here are top questions we have encountered for short-term rental hosts in regard to handling the COVID-19 pandemic, specifically loss of business income.
Are hosts eligible for small business loans?
Hosts deemed sole proprietors that report short-term rental income may be eligible for small business loans to cover interest on mortgage payments, rent, and utility bills if their business is impacted by the virus outbreak.
Having reviewed the CARES Act Fiscal Stimulus Package that was signed last week, we recommend short-term rental hosts review their options for the $10,000 loan advance and low interest loan opportunities through the Small Business Administration.
The first option is the Economic Injury Disaster Loan (EIDL) / Loan Advance which can provide an immediate $10,000 Loan Advance for ‘lost rents’ due to COVID-19. The Loan Advance does not need to be repaid. The online application is available now.
The second option is the Paycheck Protection Program (PPP) / Loan Forgiveness. This would be geared more towards Property Managers, to help retain employees or self-employed (Scheduled C) earned income.
Loan forgiveness provides loans and forgiveness options for small businesses, non-profits, and self-employed individuals with loan applications beginning on April 3, 2020. This loan must be submitted through your SBA partnering Bank and each bank has different underwriting requirements, so refer to your banking partner for details. General Information Here.
It’s important to note that you can only take one of the loan options at the end of the day and the EIDL $10,000 loan advance can only be used one time between both loans.
Please refer to the sba.gov website for the applications, terms and details. Please also consult with your local SBA lending bank and financial advisor.
To get an idea of the amount you may qualify for, here is a helpful calculator.
It’s also important to note that additional options may be available at the state and local level. These options vary state to state so please seek additional information accordingly.
Are hosts eligible for unemployment assistance?
Hosts with family members diagnosed with COVID-19, may be eligible for unemployment assistance if they are self-employed or the sole proprietor of their family. Eligibility varies state by state, so we recommend you do research for your area.
From NY Times article:
What if I have COVID-19 or need to care for a family member who has it? If you’ve received a diagnosis, are experiencing symptoms or are seeking a diagnosis – and you’re unemployed, partly unemployed or cannot work as a result – you will be covered. The same goes if you must care for a member of your family or household who has received diagnosis.
While many communities are still working towards uniform regulation, short-term rentals are seen as businesses, and states are willing to offer assistance during these difficult times where cancellations are high and income is low.
Are hosts eligible for relief from cancellations?
Following the $250M initiative to support hosts impacted by cancellations, Airbnb has determined the following guidelines under their Extenuating Circumstances Policy for reservations booked on or before March 14 with a check-in between March 14 and May 31.
From Airbnb website:
Reservations for stays and Airbnb Experiences made on or before March 14, 2020, with a check-in date between March 14, 2020 and May 31, 2020, are covered by the policy and may be canceled before check-in. Guests who cancel will have a variety of cancellation and refund options, and hosts can cancel without charge or impact to their Superhost status. Airbnb will either refund, or issue travel credit that includes, all service fees for covered cancellations. In order to cancel under the policy, you will be required to attest to the facts of and/or provide supporting documentation for your extenuating circumstances.
The host’s cancellation policy will apply as usual to reservations made after March 14, 2020.
Again, the team at Proper Insurance prays everyone stays safe and healthy and we hope this helps patch some business income and financial needs in the short term. We are confident this time will pass and we will continue to see extraordinary growth in the short-term rental industry.
Quote Your Short-Term Vacation Rental Today
Interested in a policy to protect you and your business from liability claims? Proper Insurance leads the Nation in short-term rental insurance, with over 40,000 policies written in all 50 states. Backed by Lloyd’s of London and exclusive endorsements from vacation rental leaders such as HomeAway and Vrbo, Proper Insurance is built on world-class insurance coverage. Proper’s policy covers vacation homes, townhouses, condos, duplexes, cabins, cottages, apartments, and more. With expert vacation rental underwriters, we can tailor a policy specific to your short-term rental property.