EIDL Loans: Description
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Welcome to business loans and grants. The economic injury disaster loan or EIDL and emergency grant. In this video, we are going to discuss with you what the difference is between the loan and the grant who can use this loan and what you can use it for. The $10,000 emergency grant is the first part of the EIDL loan process. This is an emergency grant and because it’s a grant, it is not a loan and you do not need to pay it back. Even if you are denied the loan you can still receive the grant so we are encouraging everybody who qualifies to apply for the loan so that you can get the grant to keep your business running. The EIDL loan is a loan and as such it does need to be paid back. If you’ve ever applied for a business loan in the past with your bank, you are familiar with the underwriting procedures and the same procedures will be followed in processing and determining the amount of your EIDL loan and if you qualify for the loan, the underwriting procedures are done through the SBA.
They are not done through your local bank so you must apply for the loan. Online credit score is a factor although they don’t tell us whether what the credit score limit is. They do say it is a factor and because this is also a part of the emergency grant, we are encouraging everybody to apply for the loan if they need it and at least get the $10,000 emergency grant. Who can use this loan, if you are a small business experiencing loss of revenue due to the COVID-19 pandemic, you can use this loan. This includes sole proprietors, independent contractors and self-employed individuals, a private nonprofit organization and 501(c)(19) veteran organizations are also eligible to apply. Unlike the PPP loan, you do not have to have employees to apply for this loan. However, if you have more than 500 employees, you do not qualify, so you must have it no more than 500 employees.
In certain industries. The SBA does consider over 500 employees as um, a different qualification and they recategorize some of the employees. We’re not going to go under that in more detail other than to just mention it to you. If you have more than 500 employees and want to know if you qualify under this SBA program, just go to sba.gov, this loan also will go under through normal underwriting process and you must have good credit. As I said prior, we don’t know what good credit is. We just know you have to have good credit as they have not given us guidelines as to your credit scores. So again, we are encouraging you to apply for the loan.
This is who can not use a loan. If you’re in the cannabis industry or any other illegal activity, you are not eligible for this loan. If you are a 50% owner in the business and you’re delinquent on your child support, you are not eligible for the loan. Farms are not eligible or any other agricultural businesses. However, nurseries do qualify. If you are in a business where you have live performers of prurient sexual nature, or you have sales services or presentation of such services, you do not, you are not eligible to apply if over one-third of your income is from illegal gambling activities. You cannot apply also businesses of lobbying, government entities, and members of Congress. So if any of these apply to you, you are now eligible to apply for this loan. Now, what can you use this loan for? This loan can be used for normal operating activities for your business, such as advertising, office expense, supplies, rent, utilities, even purchases of materials you need to make, cost of goods sold so that you can sell items in your business. So anything that is a normal operating business expense is what you can use this loan money for.
Donna Bordeaux, CPA with PYOPAccounting.com.
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