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Covid-19 Bookkeeping and the EIDL Application


Our profession is busy helping our clients navigate the financial lifelines being offered to businesses by various government entities. Guiding your clients through obtaining such financing is one of the most valuable things you can do now.

Apr 14th 2020
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One financial option bookkeeping services can do to serve your struggling small business clients that seems particularly attractive to some is the Small Business Administration (SBA) Economic Injury Disaster Loan Emergency Advance (EIDL). This article will go over the EIDL process so you can better advise the clients that need it most.

EIDL Loan Overview

In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an EIDL advance of up to $10,000. This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available following a successful application. This loan advance will not have to be repaid.

EIDL Loan Application

The EIDL application asks for gross revenues and costs of goods sold (COGS) “for the twelve months prior to the date of the disaster.” Nowhere does the application ask about expenses, only COGS. So what does this mean for a sole proprietor who provides services, but has no COGS?

For example, a person who works from a home office (no lease or rent; no separate utility bills); no employees, no subcontractors; does not buy any goods at wholesale and resells them at retail? Basically, they have none of the traditional COGS expenditures.

As such, their application will show plenty of income for the last 12 months, but no offsetting COGS (because they have none) and no Expenses (because the application does not ask for any). To me, it seems unlikely this applicant would receive the EIDL.

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