How do I record an EIDG ("Economic Injury Disaster Grant") payment from the US Treasury?
November 18, 202007:06 AM
on November 18, 202007:06 AM
First, I think you may mean EIDL where L is loan. If you have been approved and funded by the SBA for an EIDL. 3.75% 30 year loan that is a long term liability without forgiveness.
If, instead, you are a prior SBA borrower and they have refunded some of your prior loan payments and/or are paying some of your future payments without you having to reimburse, this is income. A grant is income. It might not be taxable and there will be a spot on your tax return to report non taxable income but for now add a separate income account for grants or this one in particular and record the amount
Thank you. I am pretty sure it is a grant. There is EIDL, EIDG, and EIDADV. I have read that EIDG is a grant of $1,000 per employee, which is consistent with what we received. But you still answered my question on how to record it.
Hi John, everyone I spoke to that received the EIDL said that they did not receive loan documents with terms for repayment. The funds were just deposited in the business account they specified during the application process. I don't recall seeing anything about interest or payment terms when I applied.
Some businesses are showing that they received an EIDL and others are showing that they received an EIDG. Why there is a need for both designations when the EIDL page states that it does not have to be repaid, I don't have an answer for that. Maybe the EIDL is considered income and the EIDG is not?
What are your thoughts?
UPDATE: I just found this information after I posted. There is an advance of up to $10,000 that most people will be approved for while waiting to hear if they got the SBA EIDL loan. And the advance does not have to be repaid. Read this blog post for additional information.
We are still waiting on our $10k advances (there was supposed to be an initial advance for everyone that applied and it was not supposed to be employee dependent but mid-stream they changed it to prioritize or restrict the $10k advances to companies with employees and probably going to companies with highest number first - thus kicking small mom and pop's to the end of the line. If you have no employees but got an advance more power to you but it would be rare.
A grant by any other name is still income. And it will be non-taxable, probably. And yes, if you get both an advance (which, BTW, the SBA still refers to as a "loan advance") and a PPP loan your forgiveness of the PPP is reduced by the amount of the advance
So, $10k less in forgiveness might mean $10k at 1% for 2 years. Sure, that is the PPP loan, but still an unforgiven amount to be repaid
there is a lot of good information for future reference about the EIDG (a program the SBA has had for a long time preceding the US PPP Loan Program. And you are indeed correct., the G stands for Grant and does not have to be repaid. It therefore becomes income and should be recorded as such. Whether it becomes a taxable event will depend upon your tax situation for 2020.