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What Bookkeepers Should Know About CARES Act EIDL


In the last two articles, my colleague Diana Cohn of Corner Office  and I discussed a few options for how to post PPP funds received and spent. For this article, I am returning to the subject of the SBA’s EIDL $10,000 Grant.

May 15th 2020
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First off, the CARES Act EIDL Grant is an emergency grant of up to $10,000, up to $1,000 per employee. Sole proprietors, for example, received $1,000.

Per the AIPB (American Institute of Professional Bookkeepers), “Proceeds can be used for such purposes as providing sick leave to employees unable to work due to the direct effect of COVID-19, maintaining payroll during business disruption or a substantial slow down, meeting increased costs of materials due to disruption of the supply chain, making rent or mortgage payments and repaying obligations that can’t be met due to revenue losses.”

EIDL Grant Notes

  • The CARES Act EIDL $10,000 grants are different than the normally-available SBA EIDL loans.
  • The CARES Act SBA EIDL program is currently closed, and is not accepting new applications.
  • If a business has received both the EIDL and PPP funds, EIDL funds cannot be used “for the same purpose” as the PPP loan. Here’s a good example from the website of Husch Blackwell law firm: “For example, if the business used the EIDL to cover payroll for certain workers in April, it cannot use a PPP loan for payroll for those same workers in April, although it could use it for payroll in March or for different workers in April.”

Is the SBA EIDL Grant Taxable Income?

There seems to be conflicting information on this. A recent article, titled“7 Questions About PPP and EIDL the SBA and Treasury Need to Answer ASAP” (bullet point #5) says “Yes” for regular pre-COVID-19 EIDL loans, but suggests there is ambiguity for the CARES Act SBA EIDL Grant.

That being said, most sources I have consulted indicate the CARES Act SBA EIDL Grants are tax-free money. That may change in the future, but this is my understanding as of today.

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