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You may be able to increase your EIDL loan and other important info

10-08-2020

by Benjamin R. Bostic

 

Businesses that received an Economic Injury Disaster Loans (EIDLs) under $150,000 can go back and borrow up to that amount, according to the Small Business Administration.

As long as the original loan covered less than six months of working capital, businesses can increase their EIDL loan up to $150,000 or six months of working capital, whichever is lower.

SBA officials told us they are capping loans at $150,000 due to high demand. The agency’s recently released FAQ, however, still mentions the availability of EIDLs over $200,000 that require personal guarantees.

Unlike Paycheck Protection Program loans, EIDL loans are not forgivable. However, EIDL applicants could have received an advance of up to $10,000 they do not have to repay unless they also receive a PPP loan. If a business received a PPP loan, their EIDL advance reduces the available forgiveness and the advance effectively turns into a 1 percent loan.

Borrowers have up to 30 years to repay their EIDL loan at 3.75 percent for businesses and 2.75 percent for nonprofits. Recipients can use the loans for working capital and everyday operating expenses, such as the continuation of health care benefits, rent, utilities, fixed debt payments.

The recent guidance in the FAQ also spells out how to repay loans and advances – something some businesses may want to do if they also received forgivable PPP loans – as well as information about disaster EIDLs and other topics.

You can find the full FAQ here, and the following are two additional important takeaways:

 

Why PPP loan recipients may want to repay their EIDL advance quickly

EIDL advances – which, as mentioned above, could be up to $10,000 – are deducted from any PPP loan forgiveness. That means if a business received a $100,000 PPP loan and a $10,000 EIDL advance, its PPP loan forgiveness would be $90,000.

The FAQ has instructions on how to repay loans online or by mail.

 

EIDLs for disaster loans includes civil unrest

Separate EIDLs for disaster relief are available to businesses and nonprofits in areas impacted by civil unrest, as long as they are in an area covered by a disaster declaration. Even borrowers who previously received an EIDL to help with coronavirus-related expenses can receive a separate disaster loan.

You can go to www.disasterloan.sba.gov to apply and check if there is a disaster declaration for your area.

 

Bottom line

If you have an EIDL or are considering applying for one, you’ll want to check out the full FAQ.

The Boyer & Ritter team is keeping track of the latest information and guidance. We are here to work with you and your company to help you get the full benefits of COVID-19 economic relief.

 

Benjamin R. Bostic, CPA, is a director at Boyer & Ritter with experience providing tax and accounting services for closely-held businesses, individuals, and not-for-profit organizations. Reach Ben at 717-264-7456 or bbostic@cpabr.com

 

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PPP Loan Forgiveness Workbook

With this download, you will receive a total of 4 documents. Two simplified and two average, one for weekly and one for monthly/semi-monthly. Use the document that works best for your company.