We’re happy to offer news, updates, and thought leadership to our clients, friends, and subscribers. Please feel free to look around and subscribe to whatever topics you’re interested in using the form to the right.

When It Comes to Economic Injury Disaster Loans (EIDL), Audit Compliance Can Get Complicated

by | Jul 14, 2022 | #COVID-19News, For-Profit Entities, Not-for-Profits

Loans Concept. Word on Folder Register of Card Index. Selective Focus.Throughout the COVID-19 pandemic, organizations received many different kinds of government assistance. The Paycheck Protection Program (PPP), Provider Relief Fund (PRF), Employee Retention Credit (ERC), and COVID-19 Economic Injury Disaster Loans (EIDL), to name a few. These funds were crucial to helping minimize the impact of business interruptions from COVID. Since each type of assistance had its own rules and regulations, ensuring compliance with each can be difficult.

What Are EIDL Loans?

EIDL loans were made by the U.S. Small Business Administration through January 1, 2022. The purpose of the funds was “to help businesses overcome the effects of the pandemic by providing working capital to meet operating expenses.” These loans were up to $2 million, with terms of 30 years, and interest rates of either 3.75% fixed for businesses or 2.75% fixed for private nonprofit organizations. These loans have payments deferred for the first 24 months with a possible additional six months extension if the organization is still being impacted significantly by COVID-19.

These loans require repayment, but had possible supplemental payments, usually not requiring repayment. Targeted advances were up to $10,000 and supplemental targeted advance include an additional $5,000. These advances were subject to limits for numbers of employees and also percentage of revenue reduction resulting from the pandemic.

Recent Developments

Many nonprofits are familiar with single audit. Some organizations are subject to single audit due to their loan programs having continuing compliance requirements. When this is the case, recurring or annual single audits are necessary for the life of the loan. Naturally, that question as it relates to EIDL loans could have a significant impact on each nonprofit borrower. Since requirements for the loans only apply to the years where loan proceeds are spent, EIDL loans do not have continuing compliance requirements. The requirement to repay the loan is not considered a significant compliance requirement.

Nonprofits who receive greater than $750,000 in federal awards, including EIDL loan proceeds and other awards, are required to undergo a single audit.

About Michael

Michael Thilker (CPA, CITP) has over a decade of accounting and auditing experience. His career includes extensive experience with audits of not-for-profit organizations including healthcare, membership, and other not-for-profit organizations. He has extensive experience of auditing housing authorities and non-profit affordable housing organizations. Michael also has significant experience with government entities and non-for-profit organizations with audits conducted in accordance with Government Auditing Standards and the Single Audit Act. He also has expertise in performing Service and Organization Control (SOC) engagements, specifically SOC 1 and SOC 2. He also serves as team member performing peer reviews of other CPA firms, and has been approved by the AICPA as a SOC specialist. Click here to read Mr. Thilker’s latest contribution to the Bowman Blog, or use the button below for contact information & business inquiries.




Subscribe to Email Updates

Posts by Topic

Skip to content