Question: Can I Pay Independent Contractors With EIDL Loan?

What can an independent contractor use the EIDL loan for?

Usage of Economic Injury Disaster Loan (EIDL): These are working capital loans that may be used to pay, fixed debts, payroll, …

other bills that could have been paid had the disaster not occurred..

Can I pay myself from EIDL loan?

After all, the SOP states that EIDL can’t be used to pay: “Disbursements to owners, partners, officers, directors, or stockholders, except when directly related to performance of services for the benefit of the applicant.” But if you continue to work in your business, paying yourself is a reasonable use of these funds.

How do I apply for PPP as an independent contractor?

In order to apply for a PPP loan as a self-employed individual or independent contractor, you have to meet the following criteria:Must be in operation before February 15, 2020.Must have income from self-employment, sole proprietorship, or as an independent contractor.Must live in the United States.More items…•

How does the PPP loan work for independent contractors?

Generally, the PPP loan amount that businesses qualify for is based on their average payroll expenses. However, since sole props and contractors usually don’t have payroll, their loan is based on 2019 net profit divided by 12, to get a monthly “average” net profit. This number times 2.5 equals your PPP loan amount.

How do you get Eidl forgiven?

To receive forgiveness on the advance portion of your EIDL, you’ll need to spend the money you receive on earmarked categories — you can’t just spend it on anything. Per New York state, the eligible categories to trigger the advance’s forgiveness are: Paid leave to employees. Maintaining payroll.

What can I spend Eidl money on?

This means any day-to-day expenses are a permissible use of your EIDL funds, giving you the freedom to spend it on anything like:Web hosting.Inventory.Office supplies.Accounts payable.Rent and utilities.Merchant fees.Bookkeeping and accounting services.

Can I use Eidl to pay health insurance?

This includes monies spent to maintain group health plan coverage. Companies that receive a PPP or EIDL loan are not eligible. Companies with more than 100 employees will receive a payroll tax credit for health plan coverage for laid-off workers.

Is EIDL loan considered income?

As Other Income – EIDL Grant is not related to operations, it should be shown below operating income (loss), as part of other income and not netted against related expense accounts. The current tax treatment for the grant is taxable and would need to be reported as taxable income on the tax return.

Can PPP be used to pay independent contractors?

Independent Contractors, Self-Employed Can Qualify for Their Own PPP Loans. Although payment to an independent contractor are not payroll costs, an independent contractor may qualify as a small business that is eligible for a PPP loans.

Does Eidl advance reduce PPP forgiveness?

The EIDL Grant funds can be used for maintaining payroll, providing sick leave to employees, rent or mortgages payments, and paying other obligations that cannot be paid due to lost revenue. The EIDL Grant amount will reduce the amount of any loan forgiveness on a PPP loan also obtained by a borrower.