For those PPP borrowers that already received PPP loan forgiveness – and had their amount of forgiveness reduced by the amount of their EIDL grant (up to $10,000) – the SBA issued an Interim Final Rule on January 8, 2021 stating that it will identify forgiveness payments that were reduced by EIDL Advances and automatically remit a reconciliation payment to the ACH account identified by the PPP lender. The SBA will waive the test as to whether you can get credit elsewhere. We can’t speak for the SBA so we recommend you check with the SBA or your SBDC for more guidance. If you still can’t get into the loan portal, please call the SBA EIDL customer service center at 800-659-2955 or email [email protected]. Thank you! Refrain from posting overtly promotional content, and avoid disclosing personal information such as bank account or phone numbers. Probably yes, need CPA to help you out…, Information is collected in accordance with our, Don't miss out — Complete your PPP application with one of Nav's trusted partners in 15 minutes or less. I’m self employed with no employees. I applied for the loan just to receive the grant, and it worked! I just got the loan, but my business doesn’t need that loan either. So, we applied for the loan thinking it was the grant. While it is a loan and doesn’t have any special treatment when it comes to taxes, there is one thing that may affect your taxes: the EIDL advance. any compensation of an employee whose principal place of residence is outside of the United States; qualified sick leave wages or family leave wages for which a credit is allowed under sections 7001 or 7003 of the Families First Coronavirus Response Act; or, payments of interest on any business mortgage obligation on real or personal property (such as an auto loan) (which shall. We really prefer the grant. Does it have the same or different regulations as the loan? If this occurs, the lender must notify the borrower of the date the first payment is due. Also, a business cannot use the EIDL for the same purpose as its PPP loan. I typically just save my business receipts for my tax preparer and put aside money for taxes. Paying down (including regular installment payments) or paying off loans provided, or owned by another Federal agency (including SBA) or a Small Business Investment Company licensed under the Small Business Investment Act. I am the owner and the one whos driving the truck. The EIDL advance is technically a grant for small businesses of up to $10,000. The application for both go through the same portal at SBA.gov. The Consolidated Appropriations Act, 2021, reopened the original PPP loan program (which previously expired on August 8, 2020) until March 31, 2021. Yet many of those who have received their approval notification are confused about how they can use funds from their EIDL loans. Jonah – the 3 scenarios I can think of are: My contracting money is deposited into my checking account monthly. A:    Yes. Read more about that legislation and apply for a new PPP loan here. •These are working capital loans that may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. The lender will notify the borrower of the date that its first payment is due. Learn about the Targeted EIDL grants here.. Over $200 billion in Economic Injury Disaster Loans (EIDLs) have been approved by the Small Business Administration (SBA) as of February 12, 2021. The eligible use of proceeds is limited to the acquisition or eligible refinance of fixed assets. This isn’t definitive because the IRS hasn’t specifically said that this advance should be included in taxable income, but previously they’ve been pretty clear that any forgiven SBA loan amounts need to be included in income. It also allocated an additional $20 billion to Targeted EIDL Advance program for eligible entities located in low-income communities. He does door-to-door sales. The SBA has two loan programs to help small businesses impacted by COVID-19: Economic Injury Disaster Loans (EIDLs) and the Paycheck Protection Program (PPP). If you do want to repay it I know you can do so without a prepayment penalty but I’m not sure exactly how to do that. (Has he considered PPP? I have been receiving the minimum disaster unemployment benefit for six weeks so do not want to use EIDL for payroll. Whether the business has already received an EIDL unrelated to Coronavirus or a Coronavirus-related EIDL and/or an EIDL Grant, it may also apply for a PPP loan. I wish I had read this prior to accepting EIDL loan. The eligible borrower may reapply for a PPP loan for an amount equal to the difference between the amount retained and the maximum amount applicable, so long as the borrower has not already received forgiveness. Since these loans are made by the SBA, EIDLs should not appear on personal or business credit reports. Of course I lost a lot of work in the last three months due to COVID-19. Interest may have accrued in the meantime however. Pursuant to the Paycheck Protection Program Flexibility Act, in order to be eligible for full loan forgiveness, at least 60% of the loan must be used for payroll costs, while  not more than 40% of the loan forgiveness amount may be attributable to eligible non-payroll costs. Eligible businesses, non-profits, sole proprietors, independent contractors and self-employed individuals that did not previously receive a PPP loan may apply for a PPP loan until March 31, 2021. I don’t know why you didn’t get the grant in addition to the loan unfortunately. The Consolidated Appropriations Act, 2021, establishes a specific loan calculation for the first round of PPP loans for farmers and ranchers who operate as a sole proprietor, independent contractor or self-employed individual who reports income and expenses on a Schedule F and were in business as of February 15, 2020. EIDL proceeds can be used to cover a wide array of working capital and normal operating expenses, such as continuation of health care benefits, rent, utilities, and fixed debt payments. On December 27, 2020, the President signed the Consolidated Appropriations Act, 2021, into law, reopening several programs originally created in the CARES Act and establishing several new programs for individuals and businesses. That is what we do…resale…have a state license. One commenter on the Nav blog article, Frequently Asked Questions about EIDLs, wrote: I received from the SBA an email approval for the EIDL loan at 3.75% interest. 800-659-2955 I’d be interested in what you learn from them. EIDL grants (advances) don’t have to be repaid. 3. First, before you decide it’s a really bad deal you may want to meet with your Small Business Development Center (SBDC) to discuss your concerns and find out what makes sense for your business. Option #2 is to assign a 1.0 for employees who work 40 hours or more per week, and 0.5 for employees who work fewer hours. I don’t know if they are taxing those grants but the stimulus bill passed 12/27/2020 makes it clear EIDL grants are not taxable at the federal level. Thanks, this was a very useful and clearly written article. As applicable, certification from a representative of the business or organization that is authorized to certify that the documentation provided is true and that the amount that is being forgiven was used in accordance with the PPP guidelines for use. With direct payments, the position would be that these are salary equivalents and not profit distributions. Once you qualify for a loan, it’s up to you to decide how you use it to fill the gaps in your revenue. I have a question about the E IDL loan Not sure if I qualify where do I find that out. EIDL is not a personal loan so you should not use it to pay personal expenses. I’m not sure I would have taken it. (I was also hoping to buy a new computer this year but cannot spend the loan on fixed assets.). Increased wages paid to tipped workers are eligible for forgiveness. A report by the Inspector General reviewing previous disaster loans found that “SBA issued EIDLs and non-EIDLs to businesses that did not suffer an economic loss or to businesses outside the timeframe of the disaster.”. You’ll have to check with the SBA. Lastly, I never received a call from a loan officer, so I don’t his/her contact info. But you’ll need to contact the SBA to find out how to correct your banking information. You can then pay yourself out of the business bank account and have records that you did so. The U.S. Small Business Administration announced that the deadline to apply for the Economic Injury Disaster Loan (EIDL) program is extended through December 31, 2021. Generally credit card debt is considered short term debt, however. I just got approved for a 20,000 loan. I was approved for an EIDL of $150k. Have you talked to the SBA? I’d be interested in hearing your concerns. After a borrower submits its completed questionnaire, the SBA may request additional information, if necessary to complete its review. The SBA will rely on your credit score instead of the usual “determination of ability to repay.” If you have trouble with a credit score, the SBA has authority to determine if a reasonable alternative can be used. Hi there. EIDLs are described this way in the Standard Operating Procedures (SOP 50 30 9)  for Disaster Loans: Economic Injury Disaster Loans (EIDL): Working capital loans are available to assist small business concerns … in order to meet their ordinary and necessary financial obligations that cannot be met as a direct result of the disaster. I am an independent contractor. any other loan and good equity in the property.i am current on every thing.i think up comming days to end meet will be very tough NO BUSINESS. Q:     How do I calculate the amount by which forgiveness of the Covered Period Costs will be reduced (under subsection (2), above) if I do not fully maintain my workforce? It also allocated an additional $20 billion to Targeted EIDL Advance program for eligible entities located in low-income communities. How to Apply You can apply online for an SBA disaster assistance loan. Gerri, how would I go about applying for reconsideration? My question is can I use these funds to pay for bills such as credit cards and other items I pay for, or do I need to pay myself a “salary” every month into a separate account and then use the funds to pay for bills and other expenses, some of which are on my Schedule C and some are just personal expenses? I am hoping they will give me an answer. The cost of ordering summer inventory represents an additional need. All applicants will be asked to submit an IRS Form 4506-T to allow the SBA to request tax return information on the applicant’s behalf. Instead, the borrower will receive partial loan forgiveness, based on the requirement that 60% of the forgiveness amount must be attributable to payroll costs. I have not been able to find out how to get reconsidered for the grant. I am contractor that own a small cleaning bussiness. There is a lot of confusion. – How do I get the money back? My concern is that as SBA mentioned that they will audit the loan amount after 2 or 3 years. A:    No. If you already applied I wouldn’t reapply. Reading through the SOP for Disaster Loans, it clearly states on page 79 of the PDF that nonprofit organizations that are not considered private nonprofits are ineligible. I’m so sorry to hear that Randy. How Can I Use The EIDL Loan & Advance? Claudia. However the the funds were sent in my business name instead of my name, so it was sent back to depositor (sba). I just got approved for $1000 loan but I put in 1 employee when I meant to put 10. PPP applicants that received an EIDL loan between January 31, 2020, and April 3, 2020, and used those funds for payroll costs must use the PPP loan to refinance the EIDL loan. Q:     What is the maximum amount of a first round PPP loan? This is similar to the online banking site when you have a loan … Applying for SBA Economic Injury Disaster Loans (EIDLs) Baltimore District Office How can I use EIDL funds? will EIDL reopen to non agricultural? I received the EIDL loan and the payments are deferred for a year. (Clients knew that deposits were not refundable but I still wish I could do something.). Does this debt get reported on my credit? Will you let us know what they say? A:      The CARES Act requires a lender to confirm the following: The borrower must also submit a loan application and payroll documentation, acceptable to its lender. Engaged in any illegal activity (as defined by Federal guidelines). I’d recommend you contact the SBA with that question. Thank you for this thorough article. Businesses that did not exist during the 1-year period preceding February 15, 2020 are eligible for the lesser of: Q:      What is included in “payroll costs” eligible for loan forgiveness? But I can’t speak for the SBA so you may want to check with them. Ineligible Uses of Loan Proceeds: EIDL proceeds may not be used for: 1. It also clarifies that deductions are allowed for otherwise deductible expenses paid with the proceeds of a PPP loan that is forgiven, and that the tax basis and other attributes of the borrower’s assets will not be reduced as a result of the loan forgiveness. The exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not to non-cash benefits, such as payment for provision of employee benefits consisting of group health care coverage, payment of taxes assessed on compensation, and employer contributions to defined-benefit or defined-contribution retirement plans. Absolutely, 100% the best information I have read on the EIDL and to top it off, finally an explanation on how the EDIG happens even if you do not take the loan. Such a business can have more than 500 employees, so long as that business employs not more than 500 employees per physical location. This piece addresses the Paycheck Protection Program (PPP), Second Draw Loans, the Economic Injury Disaster Loans (EIDL), and Emergency Economic Injury Grants (EIDL Grants), and has been updated in light of the Consolidated Appropriations Act. I was approved for$24500. I guess I’m confused what is the loan and what is the grant. We initially applied for the EIDL Grant, but by the time we applied, SBA closed it due funding ran out. Your EIDL loan and advance can be used for a variety of business purposes. I am not sure how quickly that will help but it’s certainly one option. Hello, I’ve read some comments of other borrowers with the same issue – all of whom or getting different answers from SBA. For example, borrowers have until the last day of the covered period to eliminate any full-time equivalent employee reductions referenced in subsection (2) above or the employee salary and wages reduction referenced in subsection (3) above. Any guidance or help you could offer would be greatly appreciated. No upfront costs or prepayment penalties. Now that I have researched this (like I should have before I signed everything) I am seeing this a real bad deal. Would it be possible to use an EIDL to pay off higher interest business credit cards? Lorenzo, I don’t think so based on our understanding of the guidelines. an inability to hire similarly qualified individuals for unfilled positions on or before December 31, 2020, or, with respect to a covered loan made on or after December 27, 2020, the last day of the covered period. What happens if you spend the funds not allowed ? Hi – We talk about the ways you can use the grant in this article: Frequently Asked Questions About Applying for SBA Disaster Loans Due to Coronavirus. Keep in mind, a default may affect your ability to get other federally guaranteed loans in the future. You’ll need to check with the SBA. In December 2020, the SBA issued Loan Necessity Questionnaires (Form 3509 for For-Profit Borrowers and Form 3510 for Non-Profit Borrowers), the purpose of which is to facilitate the collection of supplemental information that will be used by SBA loan reviewers to evaluate the good-faith certification made on the PPP loan application that economic uncertainty made the loan request necessary. hello i got approved of $56k but my account limit is $20k, can i edit and use someone else’s account info to recieve the payment since i cant get that sum in my account???? This loan provides economic relief to small businesses and nonprofit organizations that are currently experiencing a temporary loss of revenue. Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program Loan (PPP) loans are eligible for some degree of loan forgiveness. Further, within 45 days of enactment of the Consolidated Appropriations Act, 2021 (12/27/20), the SBA is required to submit an audit plan that details the policies and procedures for conducting forgiveness reviews and audits, as well as the metrics that the SBA will use to determine which loans will be audited. To make a long story short my bank did not follow the guidelines of my PPP loan. I was also approved for a $3,000 loan. To our knowledge you don’t need to set up formal payroll. Of course PUA won’t last forever. Do I still have to do anything with the loan I was approved for? I was informed that I would automatically receive the grant prior to me even getting approved directly to my bank account. I waited on hold for 2 hours and was able to make a one time payment of the full amount. Trying to decide if I accept this loan. I could put the loan in my savings account Or, can I simply note how much I paid myself from the loan. Proceeds can only be used for the following: The SBA explicitly prohibits any eligible entity from using proceeds of a PPP loan for lobbying activities (as defined by the Lobbying Disclosure Act), lobbying expenditures related to state or local campaigns, and expenditures to influence the enactment of legislation, appropriations, or regulations. If a borrower does not submit its loan forgiveness application within 10 months after the end of its Covered Period, or if the SBA determines that the loan is not eligible for forgiveness (in whole or in part), the PPP loan is no longer deferred and the borrower must begin paying principal and interest. Q: If a business receives an EIDL and/or an EIDL Grant, can it also get a PPP loan? I am a gig worker (independent contractor) and received 1k in my account, it does not say EIDG or even EIDL – but rather SBAD Treas ###. PPP loans up to $10 million can be forgiven. Can I apply to Both PPP and EIDL? If you get an answer from SBA will you let us know? I teach one-on-one lessons in the early mornings to students for my client. 3 disadvantages of getting an EIDL loan. I received my portal link and it says approved for $1,500. Specifically, the SBA will first reach out (via email) to EIDL applications that already received a partial EIDL Advance (between $1,000 - $9,000) with instructions to determine eligibility and to submit documentation. The Consolidated Appropriations Act, 2021, clarifies that gross income does not include any amount that would otherwise arise from the forgiveness of a PPP loan. A co-signer may help. I was eligible for $531,000 of PPP but they only allowed me $400,000. We would also use the funds for gas and to pay our accountant. Known as a financing and credit expert, she has been interviewed in more than 4000 news stories, and answered over 10,000 credit questions online. Everyone keeps saying to just return the funds. How can I find out if I can qualify for a loan or grant? You may want to read this article and check with one of the advisor sources listed: 5 Ways You Can and Can’t Use Your EIDL Loan. Can I stock up on inventory pay off all utilities that are behind buy a new company vehicle rent utilities? Still doesn’t explain much about what you can use it for or what you can Not use it for. I plan on using it for business expenses such as internet and utilities. Angela – Talk with your accountant. If you are nervous you can always talk to an SBA resource partner such as your Small Business Development Center (SBDC) or SBA District or Regional office. The SBA plans to audit loans over $2 million (this includes borrowers that, together with their affiliates, received PPP loans with an original principal amount in excess of $2 million) before making a determination of forgiveness, and the SBA has reserved the right to review any PPP loan of any size at any time in its discretion. Generally it’s a good idea to use a business bank account for all business income and financing. The Business Loan Insight Financing Hub – PPP, EIDL and More on Facebook may be helpful as business owners are posting approval information based on their application numbers. I applied for eidl I got turn down they said my type business did not qualify I have 3 rental Mobil homesem, I have not received anything from the EIDL loan or the SBA loan I was wondering what’s going on with my status. Is purchasing inventory to resale considered fixed assets? You don’t report how you spent the money to the SBA but your loan could be reviewed in the future so it’s recommended you keep good records of how you spent the funds. The portal specifically says loan. My credits not perfect. Russell – you can request reconsideration. Specifically, the SBA will first reach out (via email) to EIDL applications that already received a partial EIDL Advance (between $1,000 - $9,000) with instructions to determine eligibility and to submit documentation. • A borrower applying for EIDL can request an advance on the loan of up to $10,000 from the Small Business Administration (SBA). Thanks. Dawn – the email you received from SBA should contain information. The resources described above are made available to businesses within the United States of America. Borrowers may select only 1 of these 2 methods, and must apply that method consistently to all of their part-time employees. Is this the grant? Additionally, any business concern or entity that has certain connections with or operations in the People’s Republic of China or the Special Administrative Region of Hong Kong are ineligible, as are business concerns and entities that have a resident of the People’s Republic of China as a board member, and any person that is required to register under the Foreign Agents Registration Act of 1938. “Should I accept my EIDL loan?” That question was recently posed to me by a friend who received an email from the SBA stating she was approved for an Economic Injury Disaster Loan (EIDL). The same reference period must be used for each employee. Businesses with multiple locations that are eligible entities under the initial PPP requirements may employ mot more than 300 employees per physical location. 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