Economic Injury Disaster Loan(EIDL) Webinar Q&A

Questions

Does the payroll account for W2 employees and contractors?


For EDIL purposes, it is for your employees.




Can I use it for utilities if I have a home office?


Yes if you work from home and you have an accurate method to calculate a portion of your home office you use for business purposes.




What about storage payments?


Yes if it is used for business purposes prior to Feb 15.




I am a business owner and I have three 1099s contract workers, does that fall under payroll?


No.


Under CARES Act, the 1099 contractor has to apply for the EIDL. So they have to apply for themselves.




How about software services like licenses and google ads?


At this time no, the grant is to help sustain your business. It doesn’t specifically say “subscriptions” in there, so advised not to utilize for that.




Insurance for equipment, is it included? How about insurance for business vehicles?


Yes if insurance payments are ordinary and necessary part of running your business.

Yes if you are already paying these expenses before Jan 31 2020.




What is the interest rate for the money that is not forgiven?


This is a federal grant, as part of the verbiage it says, under no circumstances are we going to require you to pay this back. So it is free and they want to help you jump start your business. If under any circumstances that they do require you to pay this back, it will be at 3.75%




What about malpractice insurance?


If you are in a profession or in a business where your malpractice insurance is an absolute requirement, the answer is yes.




I use trade name but not legally a DBA, do I use my business legal name or my DBA?


Just your legal name




So what if you have a business that was registered and started the construction, renovation and start purchasing equipment last year?


If you started your business before January 31st, 2020, you can apply for EIDL.




If a business owner owns several companies, can they apply for a loan for each company?


Yes you can, but you need to make sure they are active companies that they all incur rent, utilities, and payroll.




Should we use an address which is the exact physical address or where LLC is registered?


Please use your existing active physical/mailing address of your business. Do not use PO Box.




I’ve received the number after I applied but I’ve not seen anything and it has been a week! What do we do?


Patience, practice patience. The government got really excited about telling us we’ll get these funds in three days. They just found out that millions of applications and the money is not going to be getting to us anytime soon, so just keep that confirmation number that is your application number. It will be a good way for you to track it in the future, but it is going to take a couple of weeks at this point.




Can my rent for February and March which is paid, meaning already paid, but can it be used towards this loan?


Unfortunately, this money is for future obligations and payments.




Could I use this for my subscription for QuickBooks?


No.




Can we include monthly payment for our equipment?


Yes if these are obligations you already had before Jan 31 2020.




If we are LLC S Corp do we put down LLC or S Corp?


If you are LLC elected to be taxed as an S corp, then you can put yourself as S corp.




Should we both apply for EIDL and PPP?


Yes, under the EIDL, there’s the $10,000 emergency grant and there is a loan option available for up to 2 million. So yes, I would apply for both. Though in this case you have to be careful here because the SBA says, do not use the EIDL and the PPP for the same reasons. PPP is for payroll.

So you take the EIDL and apply that towards utilities and rent then utilize the PPP to pay your employees.




Is there a timeframe in which this money has to be spent?


There aren’t specific rules such as spending this money within 30 or 60 days. The money has to be spent within approved criteria i.e. payroll, utilities, and rent.




Should we open a separate account for the $10,000?


It is a good method to track your funds.




Could you elaborate on what payments I can include? If I have a home office?


You could look at your 8829 which is how you have been claiming home office deductions with the IRS, which would be a good guideline for you to start with.




The grant is up for $10,000, what determines the amount a company receives?


When you apply for the loan, it doesn’t really ask you how much you will need. It also doesn’t talk about how much it will be approved. So it’s all or nothing, there isn’t a tiered grant that they’re giving.




Though in my businesses, retail window coverings we install and part in design and remodeling kitchen. So when figuring the remodeling part, does the cost of goods include the labor and sub labor?


Yes. Cost of goods sold is the cost that you will need to incur when you sell something i.e. costs associated directly to sales of every unit of product that you sold. So if you have hired contract labor to do it and have subcontractors, those will be part of your cost of goods.




Do you want us to put your name down as someone who assisted in the application?


No, the SBA gives these individuals a fee for assisting you. So when you get your proceeds, the SBA lender will then give the commission to these agents. We’re not agents, we’re resources, and do not look to be compensated for any of this.




Does the $10,000 grant impact the PPP? Will it be deducted from the amount we can get through the PPP?


So the EIDL say that you can use it to cover payroll, rent, and utilities. The PPP also says you can use the PPP money to cover payroll, rent, and utilities. But if you receive both the EIDL and PPP at the same time, when you ask for forgiveness with your financial institution for the amount under the PPP. If you have utilized the funds for the EIDL to cover payroll, then your forgiveness under the PPP will have to be reduced. They don’t want you to double dip, so it’s better to utilize those funds separately.