QUESTION:

Is the EIDL Advance still going to reduce loan forgiveness?

Last Updated 07.08.2020

SUGGESTED INFORMATION:

All funds received as an advance of the EIDL will be rolled into your PPP Loan by the SBA. For example:

If you applied for the EIDL advance before applying for the PPP but did not receive notification of the EIDL before submitting your PPP loan documents then your advance will still need to be added into your total loan amount by the SBA

Example 1:

  • PPP Loan Amount = $100,000
  • EIDL Advance = 5,000
  • Payroll Expenses = $70,000
  • Non-Payroll Expenses = $30,000

Assuming all other aspects of loan forgiveness has been met, the amount due on the PPP Loan would be $5,000 just the advance amount.

Example 2:

  • PPP Loan Amount = $100,000
  • EIDL Advance = 5,000
  • Payroll Expenses = $55,000
  • Non-Payroll Expenses = $30,000

Since you did not meet the 60% minimum of payroll expenses , and assuming that all other aspects of safe harbor have been met, your loan forgiveness would look like:

Max forgivable loan amount: $ 55,000 /0.60 = $91,666.67
Payroll Expenses: $55,000.00
Non-Payroll: $36,666.67

Remaining Balance of Loan to be repaid: 100,000 – 91,666.67 = $8,333.33
Total PPP loan balance including EIDL Advance $8,333.33 + $5,000.00 = 13,333.33
Final Total Due: $13,333.33

 Additional related questions:

Is the advance amount from EIDL automatically deducted from the forgiveness amount, even though the advance was used for nonpayroll expenses?