How to Easily Account for the 5 Most Common COVID Relief Payments

There are several forms of COVID relief, all with their own complexities. Has your Tucson or Phoenix business qualified for any COVID-related relief? Check out this article where we discuss what you need to keep in mind when accounting for the 5 most common COVID relief payments.

EIDL Grant – Economic Injury Disaster Grant

This grant provides economic relief to small businesses and nonprofit organizations that are currently experiencing a temporary loss of revenue. Your Tucson business might qualify! To find out if you’re eligible for the grant, visit this page to learn more.

How to Account for the EIDL Grant:

• Emergency funds up to $10K.
• It’s a grant, therefore income, and not a loan.
• Non-taxable income.
• Should be on the Profit & Loss Statement.
• Receives 1099 from the lender.

Small business owners and qualified agricultural businesses in all U.S. states and territories are currently eligible to apply.

PPP – Paycheck Protection Program Loan

A Small Business Association-backed loan that helps businesses keep their workforce employed during the COVID crisis. Many Tucson businesses qualify for this assistance.

How to Account for PPP:

• Use to cover payroll and other eligible expenses.*
• Can be forgiven if funds used correctly.
• Expenses are deductible.
• Should be on Balance Sheet if unforgiven; Should be on Profit & Loss Statement if forgiven. 

*PPP loans cover payroll costs, including costs for employee vacation, parental, family, medical, and sick leave.

PPP 2 – Paycheck Protection Program Loan Second Draw

Certain eligible borrowers that previously received a PPP loan can apply for a Second Draw PPP Loans with the same general loan terms as their First Draw PPP Loan.

• Maximum loan amount 2.5x the average monthly 2019 or 2020 payroll costs up to $2 million.
• Companies with fewer than 20 employees can apply until March 9. Opens up to everyone on March 10.
• All Second Draw PPP Loans will have the same terms regardless of lender or borrower.

EIDL Loan – Economic Injury Disaster Loan

This loan provides economic relief to small businesses and nonprofit organizations that are currently experiencing a temporary loss of revenue.

How to Account for the EIDL Loan:

• Used for working capital and normal operating expenses.
• Payments deferred for one year; interest still accrues.
• Not forgivable.
• Should be on the Balance Sheet.

Small business owners and qualified agricultural businesses in all U.S. states and territories are currently eligible to apply. Find more information here.

SBA Debt Relief – Small Business Association Debt Relief

Next in our list of 5 Most Common COVID Relief Payments is SBA Debt Relief. Debt relief to existing Small Business Association loan borrowers during the COVID-19 pandemic. Many Tucson business owners will benefit from this relief.

How to Account for the SBA Debt Relief:

• Payments of Principal, Interest, and Associated Fees.
• Taxable income.
• Interest is deductible.
• Should be on the Profit & Loss Statement.

The Economic Aid Act also authorized additional debt relief payments to 7(a), 504, and Microloan borrowers beyond the 6-month period prescribed in the CARES Act. More information here.

Do you still have questions about the 5 Most Common COVID Relief Payments, and accounting for those funds? Please don’t hesitate to reach out to us or check out our previous posts about the CARES Act & more.