If you receive a loan advance, the advance won’t have to be repaid. If you have investors, make sure you’re not violating any existing debt covenants. Also, you can't deduct your salary as a business expense. There’s not a requirement like this for EIDL. The EIDL can be used for basically anything business related. However, the EIDL can be paid off early at no penalty or extra cost. Just remember you have to track how you spend the money, and you can't claim to use loan funds from both loans for the same exact purpose (Example: for the same exact payroll period/same employees). Instead, your personal income from the business consists of the business profits, and those get added to your personal income tax return. Can I get an Economic Injury Disaster Loan (EIDL) and a Paycheck Protection Program Loan (PPP)? You cannot use the loan to expand your business or purchase new assets. The interest rate of the EIDL is just 3.75% (2.75% for not-for-profits), but the term of the loan is 15-30 years which seems daunting to commit to a loan on your Balance Sheet for that long. Unacceptable Uses of PPP Funds Q: How do you calculate a full-time equivalent FTE? Yes, you can get both loans, but the key is to use the money to cover different expenses. I don't see much downside. The website you can use to repay your EIDL loan can be found at Pay.gov. If you took the EIDL loan, please consider paying off the EIDL once your practice returns to pre-Covid profitability and you are almost 100% certain that you won?t rely on these funds in the future.? ... By contrast, Economic Injury Disaster Loans are not forgivable and must be repaid. I see no reason not to pay quarterly taxes (I assume that you are a sole proprietor or independent contractor) if you are paying them to yourself first. You can apply to both the PPP and the EIDL. The EIDL loan is a 30-year loan at a 3.75% interest rate. You can categorize the Economic Injury Disaster Loan (EIDL) as Personal Income in QuickBooks Self-Employed. You can use EIDL funds to pay off regular fixed payments, such as your business credit cards. 3, 2020. The CANs.. Q: Can I get the $10,000 EIDL Advance, the EIDL Loan and the PPP Loan? Reach out to your lender to see if you’re eligible for a deferment. No payments are required during the first year but interest still accrues. And SBA loans typically require collateral, though that requirement has been waived for smaller EIDL loans related to Covid-19. It’s still bad but the trend is upward. Hey! This grant is an advance on any potential loan and does not have to … If you have outstanding SBA loans, you can still apply for a disaster loan. However; you can qualify for up to $10,000 available as an emergency grant, upon approval. The EIDL agreement requires any borrower accepting a loan … Funds can also be used to pay interest on debt incurred before the coverage period and to refinance an EIDL loan made between Jan. 31 and Apr. To apply for the COVID-19 Economic Injury Disaster Loans and Advance, ... Do I have to pay back the Economic Injury Disaster Loan (EIDL)? To repay the EIDL loan: Go to the website: pay.gov; Create a new account (Choose ?Create Company Account?) I’m sorry - I thought you were talking about in general, not how to use the funds from the EIDL. Repayment terms on the loans are over a 30-year term at 3.75%. Or can I use the funds only for future operating expenses that will occur after the loan amount is deposited in my account? Yes, as long as it is a business expense and the vehicle is under the business name that you received the EIDL loan for. If your company owns the car, you can use it pay you car payment. I had to come out of pocket (from my savings account) to keep my business afloat-waiting on funding. A new/separate bank account is not required to use EIDL funds (although it makes recordkeeping easier). You can accept the loan, request a reduced amount or do nothing and it will be considered denied. now i m confused, in your first reply you said i can t take a distribution from the eidl loan, not a ppp loan, please clarify. All PPP and EIDL loans up to $25,000 don't require collateral or personal guarantees from the business or business owner. Please help us keep our site clean and protect yourself. PPP loans can qualify for forgiveness later on, but in order for that to happen, at least 75% of them have to be spent on payroll costs. If you are also given a PPP, this $10k will be deducted from any loan forgiveness you are entitled to. And paying yourself with an EIDL may impact your ability to receive Pandemic Unemployment during the same time period. Watch This Article in a Video: https://www.youtube.com ... we’re going to break down exactly what can you use the EIDL loan money for and what you cannot use it for. This loan provides economic relief to small businesses and nonprofit organizations that are currently experiencing a temporary loss of revenue. It depends. Jun 1, 2020 - Many people want to know, can I pay myself withe the EIDL loan? Financial Professional: Fred Rook, Certified Public Accountant (CPA) replied 4 months ago. Loan Forgiveness. I was finally funded after 6 months and was wondering if I could reimburse myself. The SBA does prohibit you from paying off specific types of debt, though. What dates do/can I use? You can use an EIDL loan to pay for the following expenses incurred between January 31, 2020, and December 31, 2020: • Fixed debts (i.e., long-term debts that your business owes), including mortgage (principal and interest) on a business property, business auto loans, and existing non-SBA loans. Question on the use of funds - if I get the funds from EIDL in mid July, can I use part of the loan amount to reimburse myself for the past operating expenses that occurred between Feb and July (like mortgage, insurance, taxes etc.)? Although the EIDL loan can't be used to refinance debt or repay federal debt, there's an exception for tax debt. ... you don't pay yourself a salary. If you own the car personally, it's a little murkier. Economic Injury Disaster Loans (“It’s not a forgivable loan; it’s a real loan,” Baran says.) Can I buy new rental properties? The application for both go through … 0. If it is not okay, the worst case scenario seems to be that you will have to pay back the loan at 1% for paying income taxes that you owed anyway. You cannot use the loan to expand your business or purchase new assets. The SBA has encouraged lenders of outstanding SBA loans to defer payments for up to 12 months for borrowers in declared disaster areas. EIDL LOANS. The SBA also has a program for loans of up to $25,000 to businesses that have an existing relationship with an SBA Express Lender. You will be notified via email to move forward with the loan process and accept it. Unlike the PPP loan, which can only be used for payroll, business mortgage interest, business rent or lease payments and business utility payments, EIDL loan funds can … So we decided to pay off the EIDL loan early. Can I pay myself with it? Finally, PPP loans can be much larger than EIDL ones. Here is a quick summary on loan details: Loans are up to $2MIL Interest does accrue on the loan during this deferment period. (The grant is being administered at $1000 per employee). The EIDL loan program authorizes each borrower to qualify for a loan up to $2,000,000, as determined by the SBA. EIDL Loan Is Not Forgivable. Under the EIDL program, loan funds can be used for a wider range of expenses than under the PPP, including fixed debts; payroll; rent or mortgage payments; and other bills that can’t be paid due to the economic impact of the pandemic. The maximum PPP loan is … A: Yes, if you use the funds differently from the EIDL and the PPP. Also, I'd recommend consulting with an … I'm Carter, I'm a CPA and can help you out. Yes. If you are not approved for the loan, this is turned into a grant. If you already have an SBA disaster loan, the SBA offers an automatic deferment. Refrain from posting overtly promotional content, and avoid disclosing personal information such as bank account or phone numbers. This includes repaying direct federal debt (including SBA loans), as well as paying down or paying off loans owned or issued by federal agencies. Can I buy a new truck? You can use the proceeds of the EIDL loan for working capital or normal operating expenses like health insurance, rent, utility, and debt payments. There are two different loan applications and processes, but if you need more working capital than the PPP loan or EIDL alone you can apply for both. For questions about your payment amount, due date, or anything else regarding the specifics of your loan, please contact the SBA directly at: (800-659-2955) or If you applied for the EIDL Grant ($10k limited to $1k per employee) then you applied for this loan. First, we have to dive into the different types of taxes there are. That is "your pay." The EIDL grant program was reduced from $10,000 per company to $1,000 per employee up to 10 employees. Except for the EIDL grant ($1,000 per employee up to $10,000), the EIDL loan is not forgivable. Yes, as long as it is a business expense and the vehicle is under the business name that you received the EIDL loan for. A great many EIDL loan borrowers will be well advised to return their EIDL loans, with interest at 3.75%, before whistleblowers become active, or governmental agents come knocking. Okay, so let’s first break down what you CAN use the EIDL Loan money for: What You Can Use For: Business Operating Expenses a. Some borrowers applied for EIDL because they wanted the grant of up to $10,000. This loan is not forgivable. Can you pay yourself back with the EIDL Loan? Can you pay your taxes with the EIDL loan? EIDL payments are deferred for 1 year after the disbursement of the loan, although you may start paying on your loan earlier than this. Most of this loan is not forgivable, with the exception of: $10k EIDL Grant: You can choose to request a $10k advance during the application process. This is just the short answer, there are stipulations based on the timing of the loans. SBA Loans. 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