How to Apply for the SBA Economic Injury Disaster Loan (EIDL) – REVISED!

Nate Williams COVID-19 Updates 50 Comments

As recommended in a previous communication, we recommend applying for the EIDL loan; the first $10,000.00 will be a “grant” (free money) from the government if used for the following:

  • Providing paid sick leave (not applicable if your office is closed)
  • Maintaining payroll (not applicable if office is closed)
  • Making rent or mortgage payments (yes, applicable if you pay rent or if you have a loan on your building, a practice purchase or equipment loan)
  • Repaying obligations that cannot be met due to revenue loss (other bills)

To clarify, we recommend borrowing $10,000.00 on this loan; this is free money. Any additional amount you borrow is a formal loan that you will have to pay back; we only recommend you borrow more money if you actually need it.

Frequently Asked Questions:

  • Do I fill this out for my partnership or PC?
    • Fill this loan application out for your partnership. The purpose of this loan is to cover payroll for your employees and other necessary business expenses. Your largest expenses are going to be at the partnership level.
  • Do I fill out a separate application for my real estate entity?
    • No, fill this out for your dental practice only.
  • Do I fill this out in my own name, or the name of the practice?
    • Fill out this loan in the name of the practice and provide information (i.e. tax returns) from your practice.


For Single-Owner Doctors

  1. Follow the link to the SBA Application website and click on the link in yellow at the top of the screen: https://www.sba.gov/funding-programs/disaster-assistance

  2. Select “Applicant is a business with not more than 500 employees.”
  3. Check the boxes below (review each question)
  4. Input your business information (Legal Name, Trade Name, EIN)
  5. Organization type will be S-Corp (For partnerships it will be “LLC”)
  6. Input Gross Revenues:
  7. Input Cost of Goods Sold:
  8. Rental Properties – Lost Rents due to the Disaster
    – This amount should be zero – you are filling this out from the perspective of the dental practice, not your real estate entity
  9. Input Business Address and other information
  10. Business Activity – Health Services
  11. Detailed Business Activity – Dental
  12. At the top of the Business Owner’s Information section, select “no” next to “Is your business owned by a business Entity?”
    – If you are a single-owner doctor, fill out your personal information as owner of the practice
    – If you are a partnership, fill out the personal information of each owner-doctor by clicking “Add Additional Owner” at the bottom of the screen
  13. Answer the questions on the final page, and be sure to check the box “I would like to be considered for an advance of up to $10,000”
  14. Input your Bank information, review information, and submit.

We hope this is helpful; if you have questions, please email: coronavirus@practicefinancialgroup.com.

PFG Advisory Team

 

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Nate WilliamsHow to Apply for the SBA Economic Injury Disaster Loan (EIDL) – REVISED!

Comments 50

  1. Brent Cline

    When do you specify how much money you want from an SBA loan/grant? Lets say I want the $10,000 grant, and no more, or lets say I wanted $50,000 total, will they contact me and ask for this info? I did not see it anywhere on the paperwork.

    1. Post
      Author
      Nate Williams

      Brent, great question. That has not been determined at this point in time. We expect that with the EIDL loan (which has the $10k grant money) one of two things will happen: 1) they will contact you saying that you’re approved for $xxx amount; or 2) an SBA representative will reach out to you to determine how much you want to borrow. There are no prepayment penalties on this loan and the rate will be maxed at 3.75%; so we don’t see a downside to borrowing more than you would have otherwise borrowed under different circumstances.
      -Nate

  2. David Latham

    When you say “closed” do you mean completely shut down, or just open significantly less? I have shut down for everything but emergency patients, which means I have someone answering and responding to phone calls. I have had an assistant come in for a few hours to help with those patients. I have done staff training on a few of the days we haven’t seen patients. So does that count as being closed or do I have to completely stop to fit that definition?

    1. Post
      Author
      Nate Williams

      Great question. I mean both: either completely shut down or open significantly less. There is a lot of grey area in what constitutes “closed.” Here are some things I do advise:
      -don’t have people come in and pay them to do menial things that don’t actually help the business; send them home to collect unemployment
      -this “social distancing” may last many months; I recommend preparing for it to last 6+ months; if it does, work will likely wind way down and you’ll want cash to last a long time
      -if you do open for emergencies, I recommend running a skeleton crew. Those people who work these reduced hours can still qualify for unemployment benefits, FYI, although they may be reduced for actual income earned.
      Does this answer your question?

  3. JAMES CATT

    Could you please explain the difference in EIN and the SSN. I’m a s-Corp and have a tax ID number. I do not have a EIN. When do I use which?

    1. Post
      Author
      Nate Williams

      Jim – EIN (Employer Identification Number) is synonymous with tax ID. On your S-Corp return you can find it on page 1 in the top right corner. Let me know if you have any other questions.

  4. Jenna Greer

    Will any of the $10,000 grant or unemployment insurance for self-employed/independent contractors be deducted from future tax returns or not have to be paid back, assuming this year’s income doesn’t rise above the thresholds?

    1. Post
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      Nate Williams

      The $10,000 will not have to be paid back, nor is it based on income. It is based on needs of the business to pay overhead expenses and a lack of revenue based on COVID-19 disruption. It will also not be considered taxable income. If you borrow more than the $10k, that will need to be paid back; remember, the $10k is part of a loan you’re applying for from the SBA. Unemployment benefits will also not need to be paid back.

  5. Dana Schmidl

    Hi-thank you for the information above. Please help me to understand more on the following items…especially the cost of goods sold (direct expenses means payroll & dental lab fees & supplies? thank you

    Input Gross Revenues:

    Input Cost of Goods Sold:

    1. Post
      Author
      Nate Williams

      For this sake of this application, we interpret your COGS as all employee costs (not including your wages or your family wages) + supplies + lab + office supplies + printing/postage. The application for the EIDL loan does not, however, clarify exactly what is to be included in COGS; you could, therefore, include all of your overhead. But the employee costs + direct costs is a truer definition of COGS.
      -Nate

  6. Kiran Patel

    I am in hotel business. Please help me to understand following items…especially the cost of goods sold.How do I calculate this number?

    1. Post
      Author
      Nate Williams

      Hello Kiran,
      We work exclusively with dentists and practice-owning doctors, so I can’t speak authoritatively about your industry and the accounting norms therein. However, for COGS I would include all the direct costs of your business, which I would use all the operating costs except costs for the hotel itself. So this would include staff salaries including housekeeping and any supply costs. I would exclude repair and maintenance costs of the hotel itself and any debt service on the hotel.
      I hope this helps, good luck!
      -Nate

      1. Sam Goldring

        I’m not saying you are wrong for you can’t be blamed for expecting one question pertaining to the expense of providing the small business’ services. But Investopedia says the following :

        Industries That Cannot Claim Cost of Goods Sold
        By SEAN ROSS
        Updated Mar 7, 2020
        Generally speaking, the Internal Revenue Service (IRS) allows companies to deduct the cost of goods that are used to either make or purchase the products they sell for their business. For accounting and tax purposes, these are listed under the entry line-item cost of goods sold (COGS). This reduction can be a major benefit to companies in the manufacturing or mining sectors that have lengthy production processes and COGS figures that are high. However, not all businesses can claim a COGS deduction, because not all businesses can list COGS on their income statement.

        KEY TAKEAWAYS
        Companies in the mining and manufacturing sector benefit from being able to deduct the cost of goods sold (COGS) from their income.
        Costs of goods sold include the direct cost of producing a good or the wholesale price of goods resold.
        Not all companies can list COGS on their income statement, however.
        In particular, many service-based businesses, such as accounting and real estate firms, do not have COGS. That’s because they don’t make or carry a good/inventory.

        1. Post
          Author
          Nate Williams

          Sam, great points, and I agree with Investopedia on this. When we prep financial statements for our dental clients we do not list COGS; when we prep their tax returns, the COGS line is blank. Cost of Goods Sold, as the name implies, is the cost you paid (either to purchase or manufacture, or mine) a good that you’re selling. When you’re selling a service, it’s harder to quantify that.
          With the EIDL loan, however, they asked for COGS and we interpreted that to mean a looser definition of the term.
          -Nate

  7. Norman Crepon, DMD

    I have completed the Business Info page to the best of my ability and am unable to proceed to the next page of business owner information. The NEXT button is dim and holdin the mouse over it results in a message saying some fields may be missing or incorrect. I have tried entering “0” in the non required fields and als leaving them blank. Can’t find an error. Could it be that the system is overwhelmed?

    1. Post
      Author
      Nate Williams

      Norman,
      Good question. The error you’re experiencing could possibly be due to the system being overwhelmed; a better guess for me is that somewhere you’ve missed a field, entered incorrect information, or a format that the system doesn’t like. Email us at coronavirus@practicefinancialgroup.com if you want one of us to get on the phone with you to walk you through the application.
      -Nate

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  8. Kris Word

    So, if I am in a general partnership and we share the payroll and rent expenses, can we BOTH apply for this grant separately and each get $10,000 toward these expenses or must we do it together on a single application?

    1. Post
      Author
      Nate Williams

      Hi Kris,
      Great question. The loan clearly states that this money is to be used for overhead type expenses: salaries, rent, utilities, etc. So our interpretation is that the loan and grant apply to the partnership entity. Additionally, on the PPP loan, you have to certify that “you have not applied for another loan under this program.” That is a different loan, admittedly, but it leads me to believe that the gov’t wants this grant money to go to one business, not multiple sub entities of the same business.
      In short: I would say to apply one time for the partnership.
      -Nate

  9. Guy Young

    Thankyou for the information so far provided.
    Question: May I use 2018 cooperate tax return, if My 2019 Cooperate have not yet been completed.
    (I expect Gross Revenues and Costs of Goods sold to increase 15% in 2019. I Expect 2 weeks before 2019 tax records are complete)

    1. Post
      Author
      Nate Williams

      Hey Guy,
      On the EIDL loan application, it asks for 12 months of revenue and COGS ending Jan 31, 2020. I don’t believe you’re asked at this point to submit tax returns. As such, I would not use the numbers from 2018, but use the 12-month numbers ending 1/31/2020. The financial statements you receive from your accountant should be easy to read and easy to calculate something like this; if not, contact your accountant and ask her/him to help you.
      If they are not helpful, email us at coronavirus@practicefinancialgroup.com and, if you have financial statements from 12/31/19 and 1/31/20, we can help you calculate the numbers.
      Or…just use your best judgment on the application and submit it (2019 numbers will be very close). Yes, that’s my final answer (time is of the essence with the $10k grant from this loan).
      -Nate

  10. champ

    HI Nate,

    What does the “Is your business owned by a business Entity?” mean? I am 100% owner of my S-corp. for a retail business.

    thanks,
    Champ

    1. Post
      Author
      Nate Williams

      Then the answer to the question is “no” for you. Sometimes the owner of a business is another business. Your S-Corp issues a K-1 to you; on the K-1 it lists your S-Corp, then the owner, or recipient of the K-1. In your case, it lists you personally, with your SSN. In some cases, as mentioned, the owner is another business.

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      1. lindsey pollaccia

        Hi. I cant find the answer anywhere maybe you can help me. Is this based on how we file in 2019? We have two dental practices that filed seperate returns as LLC’s. And we also filed a PC which handled company payroll as a PC. I tried to hurry and apply for the EIDL grant money for each company and received it today. Now I am worried I need to return the $10,000 for each LLC I received as we may not be truly elgible for the funds as the PC files as a S-Corp. Should I send the $20,000 back? I dont want to get into trouble over this if I misunderstood the rules. 2020 we will be filing as a s-corp having the LLC’s now just pass throughs to the PC. Its kind of complicated. Thank you for any advice.

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  11. MARK JONES

    I submitted my app for the $10K grant and did receive a confirmation number. Do you have any thoughts on when the funds will be available? is there a link on the website where I applied for the funding to check the status of the request using the confirmation number?

    1. Post
      Author
      Nate Williams

      Hi Mark,
      The SBA has confirmed that money will be sent out within days (3 days were mentioned) of “approving” applications. But I have no idea what is happening on the other side (the SBA side). How fast they are approving, what is their process to do so, how fast the money will go out, etc.? Let’s hope they have their stuff together; if they don’t, and this system totally automated, it may be 3 years before you get the money as millions of people likely applied.
      -Nate

  12. Vasu Iyengar

    My practice and the real estate leasing company are 2 seperate S-corporations owned by me. Can I apply for the EIDL grant through both corporations.

    1. Post
      Author
      Nate Williams

      Vasu, this has been a common question, without definitive guidance that I have seen with the EIDL loan. On the PPP loan they have made it very clear that there can only be one application per person, and you’re required to certify that you have not applied under the same program. With that spirit in mind, my answer would be no for several reasons:
      -The loan is to be used for rent or mortgage (among other limited things); although you technically have both (your practice pays “rent” to your other entity, then the other entity pays the mortgage) there is a principle in accounting called “substance over form,” which would imply that you really only have one expense – the mortgage.
      -In general, I don’t recommend trying to “game” the system. The government has made it abundantly clear that they don’t want to be “ripped off.” I’m not suggesting your intentions are sinister, I’m just saying for me personally, I wouldn’t try to double dip.
      -Nate

  13. Vasu Iyengar

    Thank you for your timely advice and clarity. I was hesitant about applying so I thought it is better to ask before doing anything.

  14. George Smith

    I keep seeing a very limited list of items that a recipient can use the $10,000 grant for. They are sick leave, payroll, business rent or mortgage and repaying obligations. Are these to be considered as examples, or are they a strict limit on the possible uses of the grant? What about other business expenses that I can foresee as being necessary for the near future: office equipment, marketing, continuing education related to my profession, license fees, business utilities, etc. ? Would they be legitimate uses of the funds, since they are important to the activities of keeping my business in operation?

    1. Post
      Author
      Nate Williams

      Great question George. Yes, you’re right that there is a strict and limited use of the funds. I would use the $10k only for those things (payroll, rent, utilities). If you don’t have those expenses now, then hold onto the money when you get it until you do have them again.
      -Nate

      1. George Smith

        Hi! I really appreciate your quick response. I think that quite a few small business people like myself are under the impression that this is a windfall they can use in many ways. I was hoping that would be the case, also. However, I do not want to go outside these guidelines, although I wish they would lighten them up quite a bit. Thanks very much!

  15. Gia Singh

    Nate, appreciate the guidance here. I have rental property however not under a business name, just under my personal name. And due to Covid19, i am unable to find tenants and having to cover the mortgage payment and other expenses for the rental. Am i able to claim relief under this SBA program to help with the mortgage payments?

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  16. Dean

    Do real estate companies qualify for the EIDL? if yes, do we appy with the SBA by entity or taxpayer, we have several LLC ‘s that have real estate rentals but all are reported on Form 1040 as they are all single member LLCs, we have roughly 11 LLC’s then we have other rentals in our taxpayer name, if we can file, as we have had lost rentals, do we file just one time with the SBA or 12 seperate applications, 11 for each LLC and 1 for Sch E (1040)?

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  17. Chris Acctg

    If you are self employed, sole proprietor and don’t take actual “draws” from your business – as all funds left in the account after expenses are your funds – how would you show the 10K was used for “payroll” , which would be your personal income?

    1. Post
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      Nate Williams

      Yes. You apply for the EIDL grant on the SBA website. Subsequent to getting the grant, the SBA will contact you about your interest in borrowing more funds from them. We don’t recommend you take these funds unless it is critical to the survival of your company.

  18. Peter

    Hello Nate, after doing a google search on CV19 financial assistance I found your page here and see you have been answering some questions for a few folks. So I have a few of my own about the EIDL.

    Background: I run a small fine-art photography business and do carry an inventory of prints, etc that I sale at art shows. So like a manufacturer I have definite costs of goods and have calculated specifically that in my books. I also have a tremendous amount of overhead such as Booth fees, travel costs, accounting, infrastructure investments, etc, etc, which I will call other expenses (OE)

    1. My first question has to do with COGS question on the EIDL: Are they just looking for the strict COGS here (costs of products sold only) or are they looking for the COGS+OE. Depending on which I use it makes a BIG difference in my listed expenses. Because I am a relatively young business I am just barely treading water financially. My financials are still preliminary but it’s looking like last year my COGS+OE was slightly more then my revenues earned so I think I would show a small loss (if I answer their question this way). Yet if I just show the COGS it would look like I made a great profit. Either way my revenue steams are dead due to CV19 and my business is unable to pay its debt obligations as well as other financial responsibilities. So my question is how do you think I should list here? My COGS (indicates profit) only or my COGS+OE (indicates slight loss)? And why or why not?

    2. If my application goes through and I get the $10K grant would I be able to use some of that money to pay down my debt burden at an accelerated rate? Could I use it for other business expenses like for example paying a book keeper to help me get my books organized, etc?

    Thank you again in advance for your guidance on these questions.

    1. Post
      Author
      Nate Williams

      Peter,
      Please forgive the delay in answering. But here are the answers nonetheless:
      1. Your understanding of the true nature of COGS is correct. However, I believe the SBA is using it as a generic term for “overhead,” or “operating expenses.” I would probably include the actual COGS + your core operating costs, especially the fixed costs.
      2. The $10k was changed to $1k/employee. So how much you get depends on the number of employees you have. However, we haven’t seen any restrictions so far on the use of that money. If you get it, I would recommend using it for the core overhead costs of your business, not to refi debt.
      And the question you didn’t ask: “should” you take the EIDL Loan (not grant, the loan portion)? I would tell someone to take the EIDL loan if it means life or death for the business; and even then, I might choose death. The SBA has built in many restrictions and controls into the loan – it’s a huge government takeover of small business, if they choose to exercise their end of the contract.
      I hope that helps,
      Nate

  19. Tina

    my 2019 tax have not been filed we this effect me filling for this loan.
    I know all the correct numbers to put in. just waiting on my account to finish

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  20. Sau Kong

    My business is incorporated as C-Corp, I own 100% stock of the corporation. How should I answer “Is Your business owned by a business entity?”
    According to your reply to one of the comments asking he own 100% of his S-corp and your reply was “No”. So I guess my situation would be the same answer “No”. But I checked “Yes”(I thought my business is a C-corp so it’s a business entity) and submitted over a week already. Will it affect my application for the 10k advance (I didn’t receive anything yet)?

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