What You Need To Know is EIDL
During these challenging COVID-19 times, the EIDL loan might be the only thing keeping businesses and non-profits afloat. Loans for Economic Injury and Disasters are known as EIDL. Here’s what you need to understand about EIDL:
Goal of EIDL: The goal of the EIDL is to assist companies in meeting their financial commitments and ongoing operating expenses that would have been able to be incurred had the disaster not occurred. If you didn’t receive the PPP but the entire EIDL, the EIDL advance is forgiven. If you also received PPP (Paycheck Protection Program) funding, the Advance does affect how much forgiveness you receive. In other words, you cannot request the forgiveness of the PPP and the EIDL Advance at the same time, nor can you apply the funds to the same costs. My clients have been advised not to apply for the Advance on the EIDL if they received the PPP or simply to be aware that if they did, the Advance wouldn’t be forgiven. Do keep in mind that the regular EIDL is a debt obligation you are taking on and will be responsible for repaying.
Receiving the EIDL: The EIDL is offered to small businesses, nonprofit organizations, and agricultural businesses to assist them in coping with the COVID-19 pandemic. designed to assist in paying bills while revenue is reduced as a result of COVID-19. It can be utilized to provide working capital and aid in paying for typical operating costs. It can be used for costs like rent, utilities, fixed debt payments, healthcare benefits, accounts payable, and utilities but not for the exact same dollars that you are counting towards the PPP.
Also understand what it can NOT be used for:
1. dividends or bonuses being paid.
2. payments made to owners, partners, officers, directors, or stockholders, unless the payment is directly connected to the provision of the requested services.
3. Loans to stockholders must be repaid, with the exception of those that were given during COVID-19 because of the disaster and keeping them would put the stockholder in an unfairly difficult situation.
4. expanding facilities or acquiring fixed assets
5.refinancing long-term debt, paying back loans obtained from other organizations, including the SBA, or refinancing loans already in place.
6. payment of fines incurred as a result of breaking a federal, state, or local agency’s rule, regulation, or order.
EIDL repayment: The term is 30 years, and the rate is 3.75% for nonprofits and 2.75% for businesses.
If utilized as intended, the EIDL will assist numerous struggling businesses and prevent their closure. Just be sure to abide by the rules and refrain from abusing the system. The fine print in the EIDL documents clearly states that you cannot sell off assets or other items that are a part of the business at the time you accept the EIDL, so keep that in mind as you put your company assets up as collateral. Any time you accept a business loan, there are similar requirements.