With the onset of COVID-19, the global economy has been struggling to keep up. Businesses are crashing, and the market is shutting down due to the losses incurred within the companies. A global economic crash, of course, also equates to a collapse for everyone else.
Now that things have started resurfacing again, the government has noted how the country needs to get back up on its feet, and that is only possible if they can get the businesses up and running.
For this purpose, the government set aside different funds to pay those who are well-deserving. These funds are like loans but don’t require business owners to make payments back to the government. The government creates these programs for the sole purpose of getting businesses back up.
Such a fund is the CARES Act EIDL.
What is the CARES Act EIDL?
CARES Act stands for The Coronavirus Aid, Relief, and Economic Security Act. The design of this program is to cater to the damages incurred in the wake of the pandemic.
Once the government announced the aid, people were encouraged to send in applications and state why they were deserving of the funds, which business owners can use for anything, from clearing out payrolls to paying for the damages.
EIDL stands for Economic Injury Disaster Loans. This loan is a subdivision of the CARES Act primarily developed to help people recover from all their losses during this pandemic.
The grant provides $1,000 to $10,000 in funding based on individual needs after the government assesses how much a company, business, or organization would require to recover from the loss.
Difference Between PPP Loan and EIDL Loan
The EIDL may sound familiar to those who are already aware of the PPP loan. The PPP loan (Paycheck Protection Program) is a program in the Small Businesses Act (SBA) that provides funding to small businesses during economic crises or when they generally lack funds.
Similarly, the EIDL is a $10,000 loan; small business owners can apply for an EIDL loan to reconstruct their businesses.
The significant difference between the loans is the PPP loan has to be repaid to the government once the business stabilizes. Business owners use PPP funds to get the company back on its feet until they generate enough revenue to repay the government with some interest.
On the other hand, the EIDL doesn’t have to repay. It is solely to help businesses.
Both the loans are a part of the CARES Act.
What You Should Know
A few things need to be kept in mind before you start thinking about getting these loans.
PPP And EIDL simultaneously?
Some people may wonder whether they can receive both funds if they feel the need. The answer is yes; you can be awarded both funds. But there is a prerequisite for this.
If you think you need both loans and that your business would collapse, you could apply for both, but you cannot use both for the same purpose. You must identify two different areas in your business that would need funding.
If not, you are likely to receive only one of the funds.
Taxable or not?
There hasn’t been a lot of conversation regarding this topic. People are still unsure whether or not the revenue generated through the grant is taxable.
The most common idea is that the revenue is likely to be tax-free. However, more needs to be done to clarify this topic so people are aware of whether it is taxable.
Can I apply now?
The applications are closed, as many businesses have already asked for these grants.
There is no timeline for people to judge when they can apply for the grant but expect it back soon.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
