How Much EIDL Loan Increase Can I Get 2021 | Amount of SBA EIDL Loan Increase
Know how much SBA EIDL Loan Increase you are eligible for in 2021. The SBA is allowing businesses and self-employed to request an increase to their Covid-19 EIDL Loan with a max of $500,000.
LINK TO VIDEO ON HOW TO APPLY FOR EIDL LOAN INCREASE – https://youtu.be/TmsuCts9KEE
LINK TO VIDEO ON HOW TO USE EIDL LOAN FUNDS – https://youtu.be/CiUFBMWp2OI
This video is intended for educational purposes and should not be taken as legal or tax advice. You should consult with your financial professionals about your unique financial situation before acting on anything discussed in these videos. Freedomtax Accounting and Multiservices Inc. is providing educational content to help small business owners become more aware of certain issues and topics, but we cannot give blanket advice to a broad audience. Freedomtax Accounting and Multiservices Inc. or its members cannot be held liable for any use or misuse of this content.
Now that the SBA is allowing you to request an increase on your EIDL loan. One of the most common questions we get here at Freedom Tax Accounting is well how much of an increase can I get, and that’s what we’re going to talk about in this video. Hello from Freedom Tax Accounting, we’re an accounting firm where we have been providing quality tax and accounting services now for over 20 years. If you are new to this channel, we provide strategies for small business owners so they can achieve their financial goals. This video is being recorded on April 22nd, 2021 and we always emphasize the date on the recording on any video relating to the EIDL or the PPP loan program because these programs have been constantly changing. So, there may be things we discussed in this video that can change as soon as tomorrow; so that’s the importance of subscribing to our channel that way you are always up to date with the most current and correct information relating to these SBA loans okay.
So, as you all know the SBA is now allowing businesses or self-employed who got the EIDL loan in 2020 or 2021 to request an increase on their EID alone, and now the most common questions we get here in freedom tax is well if I request an increase how much of an increase can I get. So, basically, that’s what we’re going to discuss. Let me show you okay so this is the most common question, we are getting right now at freedom tax relating to the EIDL, “How much EIDL loan increase can I get?”
Okay so as an overview remember that the EIDL loan has been extended, so you can request an EID alone until December 31st, 2021. So, if you have not applied for the EIDL loan in 2020 or 2021, you can now apply for the new loan and you have until December 31st loan.
Now meaning that you have not received an EIDL loan in the past the EIDL loan that you apply for now will be a larger amount compared if you had requested the loan in the past because the SBA is implementing a new formula that you’re going to get up to 24 weeks of operational expenses up to $500,000 okay. Remember in the past the max you could get was 150,000, now they have increased the max to 500,000. If you received an EIDL loan in 2020 or in 2021 with the old formula, you can now apply for an increase okay.
So, basically in the week of April 6, the SBA started to send out an email because in order to request an increase on your EIDL loan, you have to do it via email. So, there’s no website, there’s no portal that you can go and request the increase, it has to be via email. What email? This is the email the SBA started sending out on the week of April 6, 2021. Basically, letting you know that according to their records that you received an EIDL loan, and they give you the instructions right here on how to request the increase okay.
Now if you don’t know how to request the increase, we have done a video in the past that I am going to put a link to that video on the description of this video. So, that way we guide you step by step on how to write the email to request the EIDL loan increase okay.
Now even though you may have received an EIDL in the past, some of you are telling us that you have not received the email from the SBA, and we really are not sure if you have to get the email in order to request the increase or if you can just basically write the email to the SBA to request the increase. We suggest if you haven’t received the email just write the email request there’s nothing to lose okay. So, that’s what we’re telling our clients that have not received the SBA email and they want to request the EID loan increase we’re telling them, let’s just do the email okay; there’s nothing to lose okay.
So, as a summary we wanted to emphasize that remember that the Idle is a loan; this is not the grant all right. Remember that the Idle program has the grant portion, and the Idle program has the loan portion okay this is to request an increase on your loan all right, and remember it’s a 30-year loan 3.75 interest rate 2.75 for non-profits. If you got your Idle loan in 2020, meaning that you have 24 months to start making your monthly payments from the date from the month you got the funds. If you get your Idle loan in 2021 you have 18 months of payment deferment very important because there’s a lot of people confused. The Idle loan does not have forgiveness. The loan that has forgiveness is the PPP loan which is a separate program; the EIDL has no forgiveness. Remember that this loan has very strict rules you cannot use the funds for whatever you want and the SBA will be requesting financial statements in the future because they want to check how you are using the EIDL loan funds.
In the past, we have done a video on how to correctly use the EIDL loan funds okay. If you haven’t seen it, we are going to put a link to that video in the description of this video okay. So, basically, let’s go to the question of how much EIDL loan increase can I get. Now the thing is no one knows for sure the exact SBA formula that they are using to calculate the EIDL loans. If you are subscribed to JJ the CPA, he has a great channel and I love the way it says that the SBA formula is an urban legend. But since we have been working with our clients getting the ideal loans now for a year, we have come up with our own formula here in Freedom Tax and we have come very close to what the SBA has proposed to our clients on getting the EIDL loan okay. So, that’s the formula that we are going to share with you today all right.
Now in order to know how much EIDL increase you’re going to get you will need to get your gross receipts of 2019, and your cost of goods sold of 2019 okay. So, where do you get these numbers from? So, if you are a schedule c filer then look at your schedule c for 2019, even though here it’s 2020 look at your schedule c for 2019. and this is line one this is where you get your gross receipts or sales. In line one that’s the number that’s here. And then your cost of goods sold is line four, so the number that’s on line four that’s your cost of goods sold. If it’s zero if this is blank then your cost of goods sold is zero okay. So, this is if you are a schedule c. If your business files the 1120 meaning that you are a c-corp take a look at your 1120 of 2019, and once again, here line 1a is your gross receipts that are this number right here 1a and line 2 is your cost of goods sold.
If your business is an s-corp and you file the 1120s, you need to look at your 2019 1120s and line a gross receipt right here, line 2 cost of goods sold right here right. And if your business is a partnership that files form 1065, look at your 2019 1065. And once again look at line 1A gross receipts and line 2 cost of goods sold. So, that’s where you get the numbers from okay. And you also need to know the amount of EIDL loan that you have already received either in 2020 or in 2021 okay. So, this is the formula that we think the SBA is going to use is going to be you take your 2019 gross receipts, you subtract your 2019 cost of goods sold, you divide by 12, you multiply by 24 and you subtract the amount of Idle that you have already received all right; Idle loan note Idle grant. And that number should be the amount of increase you’re going to get up to $500,000. Okay once you take your 2019 gross receipts you subtract your 2019 cost of goods sold, you divide by 12, you multiply by 24 and you subtract the EIDL loan amount that you already got okay. And then that number up to $500,000 we think that’s the amount of increase that you can request; the max that you can request from the SBA okay. Let’s look at an example: let’s say that we have a case where the gross receipts are two hundred thousand dollars, your costs of goods sold are $50,000, this business received an EID alone in the past of $75,000 okay. So, once again we take the gross receipts 2019 200,000 minus the cost of goods sold, that’s 150,000 we take that and we divide by 12 that gives us 12,500, we take the 12,500 multiplied by 24 and then $300,000 okay, and then the $300,000 we subtract the $75,000 of EIDL loan that we already got in the past and then 225,000 should be the amount of increase I can get. Now, remember that this is up to 500,000 and if this number is higher than $500,000, the max you can request is $500,000 okay.
So, we think that’s the way the SBA is going to re-calculate your EIDL loan increase. If you have any questions about the EIDL Loan, if you want to apply for an EIDL loan if you want to apply for the PPP, if you have questions on how to use your PPP funds if you have questions on how to use your EIDL loan funds then we are providing consultations this is our contact information okay. And then remember that we are also part of Freedom Group where we are a group of four companies that not only provide tax accounting we also provide immigration services, real estate financial planning, and insurance okay, so we can help you out in many ways.
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