5 Ways You Can and Can’t Use Your EIDL Loan

5 Ways You Can and Can’t Use Your EIDL Loan

5 Ways You Can and Can’t Use Your EIDL Loan

Advertiser & Editorial Disclosure

Over 1.7 million Economic Injury Disaster Loans (EIDLs) have been approved by the Small Business Administration (SBA) as of June 21, 2020. Yet many of those who have received their approval notification are confused about how they can use funds from their EIDL loans. As one applicant commented on the Nav blog: 

“So much information available on what NOT to use EIDL funds for, but I’ve yet to find a detailed list of what funds CAN be used for.”

And another asked: 

“It’s very vague on what I can use it for. Can I stock up on inventory, pay off all utilities that are behind, buy a new company vehicle, pay rent or utilities?”

Many business owners have never used a government loan program like this before and they are worried about the possible consequences of using their EIDL funds incorrectly. They also correctly observe that the guidance isn’t exactly crystal clear, and is especially confusing for independent contractors and the self-employed who may have limited knowledge of small business accounting and terms like working capital that are often associated with financial statements

In this article we’ll discuss some popular questions we’ve received from EIDL applicants to our articles Frequently Asked Questions about EIDLs and 5 Reasons You May Want to Reconsider An EIDL Loan, as well as in the Facebook group, Business Loan Insight Financing Hub – PPP, EIDL and More on Facebook, where these loans have been a popular topic of discussion. We have edited some of these questions for clarity. 

Questions we’ll tackle here include whether you can use EIDL to:

  1. Pay yourself
  2. Pay debt
  3. Buy a vehicle or home
  4. Start a new business
  5. Pay rent or mortgages

We’ll also discuss how long you have to use the loan proceeds, what documentation you must keep and what to do if you want to return it. 

Keep in mind we will share and discuss guidance from the SBA here but we can’t and don’t speak for them. Do not rely on this article for specific information on how to properly spend your EIDL funds. If you have questions about properly using your loan proceeds, we recommend you talk to your accountant, or your legal or financial advisors. You can also get free assistance by contacting the SBA Disaster hotline, your regional SBA office, your Small Business Development Center (SBDC) and/or SCORE. (Locate your local office at SBA.gov.) 

How EIDL Funds May Be Used

EIDL loans weren’t created just for the coronavirus economic crisis. In fact, they’ve been part of the SBA’s Disaster Loan program for many years. They often make national headlines when a natural disaster hits an area, like when Hurricane Harvey caused flooding and business disruption for many parts of Texas. So before we dive into specific questions, let’s look at how these loans were designed to be used. According to the Standard Operating Procedures for Disaster Loans (SOP 50 39) (which predates the COVID-19 crisis): 

“Economic Injury (EI) is a change in the financial condition of a small business concern, small agricultural cooperative, small aquaculture enterprise, or PNP of any size (excluding religious organizations) attributable to the effect of a specific disaster, resulting in the inability of the concern to meet its obligations as they mature, or to pay ordinary and necessary operating expenses. (Note: the SBA opened up EIDL to religious organizations impacted by coronavirus.) 

Economic injury may be reduced working capital, increased expenses, cash shortage due to frozen inventory or receivables, accelerated debt, etc. Economic injury loan proceeds can only be used for working capital necessary to carry the concern until resumption of normal operations and for expenditures necessary to alleviate the specific economic injury (emphasis added).”

Many applicants aren’t familiar with the term “working capital,” though, and as a result they find that description confusing. We were unable to find an official SBA definition of working capital, but generally, working capital loans are generally used to pay day-to-day expenses of the business. These might include salaries, inventory, rent, utilities, and short-term debt or long-term debt payments, for example. (Again this isn’t an official SBA definition.)

While there is no comprehensive list of how EIDL funds may be used, if you’re trying to err on the side of caution, there are clues in the section of the SOP that describes how to calculate economic injury. (Keep in mind that with EIDL, the borrower doesn’t ask for a specific loan amount; instead the SBA will calculate it based on its formulas for determining economic injury.) The following examples come from the section of the SOP (page 186-187, abbreviated here) that relates to calculating economic injury: 

“To-date needs are normal obligations already incurred (usually reflected as liabilities on the most recent available post-disaster balance sheet), which the business is presently unable to pay as a result of the disaster. They include funds necessary to bring delinquencies current and to restore working capital to normal levels (emphasis added)…

Future needs are normal obligations, which the business would not be able to meet throughout the remainder of the injury period. They will sometimes be a continuation of to-date needs, such as: (1) Fixed debt payments necessary to maintain the current status of long term debts; or (2) Payments of ongoing fixed expenses such as rent; utilities; insurance premiums; or the owner’s draw/salary when the draw is both normal and essential… 

Extraordinary items are needs outside of normal operations and directly caused by the disaster. Extraordinary items can include: (1) Temporary rent or storage fees, additional advertising costs, etc.; (2) Accelerated debt due to the disaster; (3) Inventory replacement may be an extraordinary item. 

For example, in the spring, a clothing store located in a disaster area is left with an inventory of winter clothing and has no funds to order summer stock. The cost of ordering summer inventory represents an additional need.”

How EIDL Can’t Be Used

There are some ways that you clearly cannot use disaster loan proceeds and these are included under the section that includes ineligible use of proceeds:  

“EIDL proceeds may not be used for: 

    1. Payment of any dividends or bonuses; 
    2. Disbursements to owners, partners, officers, directors, or stockholders, except when directly related to performance of services for the benefit of the applicant;
    3. Repayment of stockholder/principal loans, except when the funds were injected on an interim basis as a result of the disaster and non-repayment would cause undue hardship to the stockholder/principal; 
    4. Expansion of facilities or acquisition of fixed assets; 
    5. Repair or replacement of physical damages; 
    6. Refinancing long term debt; 
    7. Paying down (including regular installment payments) or paying off loans provided, or owned by another Federal agency (including SBA) or a Small Business Investment Company licensed under the Small Business Investment Act. Federal Deposit Insurance Corporation (FDIC) is not considered a Federal agency for this purpose; 
    8. Payment of any part of a direct Federal debt, (including SBA loans) except IRS obligations. (Note: There is an entire section that goes into more detail on paying federal debts. If you want to use EIDL proceeds that way, refer to page 75 of the SOP.) 
    9. Pay any penalty resulting from noncompliance with a law, regulation or order of a Federal, state, regional, or local agency. 
    10. Contractor malfeasance; and 
    11. Relocation”

With that background in mind, let’s explore specific questions we’ve received around the use of EIDL funds. 

1. Can I Use EIDL Funds to Pay Myself?

Paying yourself from EIDL funds is a source of confusion for some. This business owner says she hasn’t paid herself a set salary in the past and is unsure how to compensate herself using EIDL funds: 

“Can it be used to pay myself weekly if we never paid ourselves, but transferred funds from the business account to pay personal stuff if needed. How would I calculate?” 

Another one asks: 

“I’m wondering if there is a limit on how much we can ‘repay’ ourselves with this loan for lost wages?”

It seems clear you can’t pay yourself unless it’s for work you do in your business. 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. If you continue to work in your business, it may be helpful to use what you’ve paid yourself in the past as a guide to how much you can pay yourself. For those who don’t pay themselves a salary, you may want to look at what you have taken out in the past as owner’s draw, disbursements, or as profits. (All of these must be related to work you’re doing for the business.) Borrowers getting Paycheck Protection Program (PPP) loans who are self-employed, for example, use their net profit on Schedule C Line 31 and divide it by 12 to determine their average monthly payroll. It’s reasonable to assume that formula could be used to calculate owner’s compensation for EIDL as well. 

Another business owner asks about paying themselves while their business is closed: 

We were approved, have no employees. Just a small cleaning business. We have lost income to ourselves as no one is wanting us in their house to clean. Can $ be used to pay us what we normally would have made?” 

The type of work you do to earn your pay does not appear to be restricted. If your business is physically closed, maybe you can take this time to work on your website, accounting, social media advertising campaigns, marketing etc. to help your business stay afloat as you wait to resume normal business functions.

Verdict: Yes, but only for working in your business

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2. Can I Use EIDL to Pay Off Debt?

The EIDL carries a 3.75% interest rate (2.75% for non-profits) which makes it less expensive than other types of unsecured small business financing available now. As a result, we’re seeing lots of questions around using these loans to pay down or pay off other debts. 

“Can it be used for charges put on high interest credit cards from when the pandemic started? Would we total the charges in that time frame and pay it from the EIDL?

Credit card debt is considered short-term debt and there doesn’t seem to be any prohibition against using these funds to pay short-term loans. 

Another reader asked:

“I also have a personal loan (with a fixed payment) that was used (partially) for business expenses. Can I use the loan to pay that down?”

That situation seems to be trickier. First, if the loan has a repayment term of over one year, it’s probably considered a long-term debt under General Accounting Principles (GAP) and therefore would not likely be eligible for refinancing. If this were purely a business debt, then making payments to keep the debt current would seem to be an acceptable use. But here the borrower has used the loan for both personal and business expenses, which muddies things considerably. It is probably safest to pay that debt out of personal funds. 

Verdict: Yes, but not to refinance long-term debt

3. Can I Use EIDL to Start a New Business?

We’ve seen several questions from recipients who don’t see a positive future for their current business and want to know if they can use this loan to start something new: 

“I am an Uber driver and I got approved for an EIDL loan. Can I use it to switch business industries and start new business?”

That does not appear to be an acceptable use of EIDL based on the definition we discussed earlier: “Economic injury loan proceeds can only be used for working capital necessary to carry the concern until resumption of normal operations and for expenditures necessary to alleviate the specific economic injury.” In addition, if relocation is an ineligible use for an existing business, it’s doubtful that starting a brand new business would be considered acceptable use. Check with an advisor before you go this route. 

Verdict: Not likely

4. Can EIDL Be Used to Buy a Vehicle or Home?

One Uber driver who says they were approved for a $45,000 EIDL wants to know if it’s OK to use that money to buy a home. Another wrote:  

“I am an Uber driver (independent contractor) and received a $41,000 EIDL loan as an independent contractor. Can I use EIDL to buy a vehicle for driving Uber because it is my only source of income for the last 3 years?” 

First, buying a home clearly falls outside the intended uses of EIDL. It appears that buying a vehicle does as well, even if it is a business purchase. Remember that ineligible uses of EIDL proceeds include “acquisition of fixed assets” and fixed assets usually include vehicles. 

Verdict: Not likely

5. Can an EIDL Cover My Rent/Mortgage?

One reader asks whether EIDL can be used to pay “shop rent” and that seems to be a very reasonable use of working capital funds. Similarly, paying the mortgage on your commercial property or even a rental property may be acceptable as these fall under  “fixed debt payments necessary to maintain the current status of long term debts.”

On the other hand, a reader who works from home wants to know if it’s acceptable to use EIDL to pay rent. “Would this also apply to a private live/work condo mortgage?” they asked. Since that’s a combination of personal and business expenses, we’d recommend getting professional advice before using EIDL that way. 

Verdict: Yes, likely if used for business expenses

Is There a Deadline to Spend EIDL Funds? 

Several readers have asked whether they have to spend EIDL funds within a certain period of time. 

“Frankly, I don’t have an immediate way to spend the funds I received. Is there a legal way to place the funds in a retirement account? If I want to return the EIDL funds, can I legally let them sit in a brokerage account for a year before the payments start?” 

Remember, earlier we pointed out that the SOP states: “Economic injury loan proceeds can only be used for working capital necessary to carry the concern until resumption of normal operations and for expenditures necessary to alleviate the specific economic injury.” 

The COVID-19 economic crisis is an ongoing crisis and we don’t know when it will end. It seems reasonable that business owners may continue to use those funds for as long as the crisis continues to impact their operations. That may be for months, a year, or even longer, depending on a number of factors. 

A report from the Office of the Inspector General found that in previous disasters some borrowed from the EIDL program when they really didn’t need it. A business that does not experience economic injury would be wise to consider returning the funds. 

How Do I Document How I Used EIDL? 

There is also confusion about documentation required. 

“I’m self employed…and it says show receipts, do we just save our receipts and turn them in at some point?”

You don’t turn in documentation automatically but you should keep careful track of how you spend EIDL proceeds in case the SBA or another governmental agency asks to review that information in the future. Just as there have been audits and inspections of past disasters, there will be scrutiny of some of these loans as well. You might put a note “EIDL” on those expenditures in your accounting program and keep a file with receipts. If you don’t use an accounting program it’s a good idea to keep a spreadsheet listing how you spent these funds.

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This article was originally written on July 1, 2020 and updated on July 14, 2020.

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ABOUT AUTHOR

Gerri Detweiler

Education Director for Nav

Credit expert Gerri Detweiler is Education Director for Nav. She has more than three decades of experience in consumer credit education, has been interviewed in more than 3500 news stories, and answered over 10,000 credit questions online. Her articles have been widely syndicated on sites such as MSN, Forbes, and MarketWatch. She is the author or coauthor of five books, including Finance Your Own Business: Get on the Financing Fast Track. She has testified before Congress on consumer credit legislation.

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92 responses to “5 Ways You Can and Can’t Use Your EIDL Loan

  1. It states here in this article as well as the SBA SOP on page 75 as you stated here that funds can be used to pay IRS debt. The statement is that you can not use the funds to pay federal debt from federal agencies, including SBA, “except IRS”. In this case am I correct in thinking it could be used to pay IRS business debt? Thank you so much for this clearly written article that has been of help.

    1. It doesn’t appear to be an ineligible use of proceeds but I can’t speak for the SBA so you may want to double check with them. You can certainly reference page 75 of the SOP as a guide.

      I’m glad it was helpful. I wish I could be more specific – trying to work from what we have!

  2. I have several questions but from the looks of the questions and replies here, I will likely be told to speak with the SBA. News flash! the SBA reps don’t have answers either. It’s all a guessing game and a crap shoot at best. Use the proceeds however we ‘interpret’ the rules and hope you don’t get audited.

  3. I have 2 questions regarding spending the EIDL Loan.

    1. I understand you cannot use the loan for purchasing a vehicle/ can you use the loan for paying your monthly car insurance & car loan payments during the months your business is effected by Covid-19?

    2. Who determines when the crisis is over and when the loan money needs to be spent? Who will notify me? What will happen to any left over funds if not all used within that timeframe?

    3. I own a home daycare and would like to hire my 13 year old daughter to assist me in my day to day operations/ can I use the EIDL funds to pay her?

    1. Those are all great questions. We don’t work for the SBA so we cannot speak for them. The best we can do is to try to provide information available from the SBA. To address your questions:

      1. If your car payments are normal business expenses it would seem they would fall under the definition of working capital expenses. Again we can’t speak for the SBA.
      2. Great question. Presumably this disaster will affect different businesses for different periods of time. If it turns out you don’t need all the money you received you can return it. There is no prepayment penalty.
      3. We can’t comment on this scenario unfortunately. Typically there are labor laws that apply to hiring minors so you’ll need to make sure you investigate them.

      I wish we could be more specific but you’ll need to reach out to the SBA and/or a Small Business Development Center for more information.

  4. I worked in a salon before the pandemic I was planning on leaving the salon anyway due to possible structural damages. So the pandemic hit and not being able to pay the existing rent from not working, there I decided to leave the salon for both of those reasons. Months later I applied for the loan with no location. Could I use that loan to find another place in my county?
    I spoke with SBA and their advice was to contact a lawyer because they can’t give me legal advice and she put a lot of emphasis on no relocating no upgrading. I don’t have a location so I’m stuck. I don’t know what to do.

  5. I have an EIDL question:
    I have a 1 year interest only bridge loan of 75k that has my business building as collateral, I used the loan proceeds to purchase the building one year prior to the EIDL loan. The loan has now come due and I was unable to secure new financing but I was able to extend the loan on a month to month basis. Can I pay this off with EIDL money?

    1. Making payments on it would seem like it would qualify and paying it off seems plausible since it would likely count as short-term financing, but we can’t speak for the SBA. You’ll need to check with them.

  6. Hello

    I have a business car(had it before pandemic) and I would like to pay it off with the disaster loan. Is it ok to use the loan to pay it off. My business struggles and would help me to pay off my debt.

    1. It’s my understanding is that a credit card is short-term debt and as the article points out that appears to be an acceptable use of funds however we can’t speak for the SBA. If in doubt, you may want to ask the SBA or an SBDC advisor or SCORE mentor.

      1. Hello
        Thank you! It is a business vehicle not a credit card. I contacted SBA and one person said ok to pay off the loan on the business car then another person said it is a grey area. Im so confused now.
        thanks

        1. I’m sorry I misread that. My understanding is that you could make the payments on a business vehicle but not pay it off as it’s long-term debt. But again I don’t speak for the SBA.

      2. I just knew the restrictions of how to use the EIDL loan. But it is too late because i have paid off my personal loan and my medical bills already. So, i am going to pay off the SBA loan before the end of the year because the restrictions give me an anxiety. Will i be arrested even if i paid the EIDL Loan off?

        1. Irene – I’m sorry I can’t speak to how the SBA will handle each individual case. There are a lot of these loans out there and it seems it will be difficult to audit all of them by the end of this year but I don’t know what the process or procedures are for reviewing them.

  7. Good Aft
    if after receiving The EDIL loan and i have leftover money how can i keep the leftover money because the rates are so reasonable

    1. Andrew – I can’t speak for the SBA on this question. The question in my mind is whether your business needs the funds. These loans are not supposed to go to businesses that don’t need them.

  8. My business is operated out of my home. A certain percentage of my house payment gets written off on my taxes. My question is can I use my eidl funds to pay my monthly mortgage? Or do I pay only a proportion of my mortgage with my eidl funds? Thank you for helping.

    1. Jo – the SBA has not released specific guidelines to answer your question. We tried to provide helpful information in this article but beyond that we recommend you check with the SBA or your local Small Business Development Center/SCORE.

    1. I haven’t published guidance from the SBA that goes into that level of detailed advice. We recommend you talk with the SBA or your accounting professional if you have specific questions about your situation.

    1. I haven’t seen that specific question addressed in guidance. It may depend on whether your business normally pays for your health insurance. I’d recommend you talk to the SBA, your SBDC or a legal professional.

  9. I have a work cargo van that I use for my business. It is in my name because my business did not have credit when I financed it. It is used for my business. Can I use EIDL to make the payments?

    1. I would imagine that may depend on that depends on whether it is a normal business expense but I can’t advise specifically one way or the other. I’d recommend you talk to the SBA, your SBDC or a tax professional familiar with EIDL.

  10. Could you answer a few self employed EIDL questions for me? My office computer crashed. Can I use the EIDL funds to replace it? It is an essential part of my business which has been hit hard. Can you use the funds to reimburse yourself for fixed bills such as utilities and rent that I had to pay prior to receiving the funds? For example I didn’t receive my funds until June, but I applied in March.

    1. Michael – I’ve tried to share guidance based on the Standard Operating Procedures (SOP) for Disaster Loans which you can read here. However they don’t detail every scenario and since I don’t work for the SBA I don’t feel comfortable providing specific advice. I’d recommend you talk to the SBA, your SBDC or a legal or tax professional familiar with this program.

    1. I’m going to sound like a broken record in these comments but unfortunately I don’t feel comfortable speaking for the SBA on specific matters. I’d recommend you consult with the SBA, your SBDC or a legal or tax professional.

  11. Could the loan be used to pay say, a year in advance, on a piece of equipment? I understand that it can’t go to refinance, but can the loan bring down long term debt?

    1. Bill – As I noted in the article: “Economic injury loan proceeds can only be used for working capital necessary to carry the concern until resumption of normal operations and for expenditures necessary to alleviate the specific economic injury (emphasis added).” I don’t think prepaying debt sounds like it fits in that category but I can’t speak for the SBA. I’d consult with them or your tax professional for specific advice.

  12. I am a CDL truck driver, I work for different companies and am paid by 1099, oilfield went down and I lost a significant amount of income. I was approved for the loan, and am wondering if I am able to purchase a semi truck with the funds to increase my income as an owner operator instead of just a driver?

  13. I received a PPP loan and a EDIL loan…. My business was impacted mildly and have resumed 80%.. i used my PPP for all payroll… Can i continue to use my EDIL for payroll, even if i am collecting income… Also i have a 50,000 line of credit… can i pay this off

    1. I tried to address your question about payroll in #1 in this article. Your second question is in my point #2. Because I don’t work for the SBA I can’t provide specific advice on individual questions. I’d recommend you call the SBA or talk to your local SBDC or tax pro for further guidance.

  14. Can I use my loan to buy a retail space? I have 2 barbershops and I want to downsize . I rent spaces now. Can I buy a place with it?

    1. Randy – Relocation is not an acceptable use of funds. I assume that would fall under that category but I don’t work for the SBA so please reach out tot them directly to get an answer. If you do, please come back and share with us what they told you. I’m sure others are wondering the same thing.

  15. Gerri –

    In your article, your refer to General Accounting Principles (GAP). This is incorrect. The correct term is Generally Accepted Accounting Principles (GAAP). Otherwise, the article is a wonderful summary of EIDL requirements in easy-to-understand language.

  16. Hello. Thanks for the information. Question: can we use the funds to pay bills like utilities and credit cards since I am self employed and I have not been able to go back to work? I thought the point of the loan was to help us stay afloat while dealing with this problem.

  17. So sorry. I meant to give 5 stars and accidentally hit 4 and it won’t let me change it. Very helpful.

  18. Thank you, this is all very helpful. I did get an EIDL loan for my business, is it still ok to seek other funding like an advanced sales loans through our credit card gateway provider? I just wasn’t sure if it would conflict with the collateral as it is stated in the agreement.

  19. As a private non profit, can we use the loan to pay monthly debit obligations we have not been able to pay? And to refinance long-term debt – I realize we can’t do that. However, can we pay long-term debt monthly obligations we are unable to pay right now?

    1. That seems to be the purpose of the loan – to pay normal and ordinary expenses the business cannot pay due to the disaster. But I’d check with the SBA or your tax professional about any specific questions.

  20. I still am not clear if I can accept an Economic Injury loan/grant and collect unemployment as well. I am an independent contractor and all of my business dried up with the pandemic. I am the owner and only employee of the company. I have been collecting Pandemic Unemployment Insurance. Can I accept this small loan/ grant?

  21. Hello I was wondering if my company’s normal business is fix and flip real estate properties , mostly single-family , is that considered proper use of the EIDL funds…..

    Thank You!!!

  22. GREAT article! Every one of the many questions I had about how and what I can use my EIDL money on was answered in this well written and well laid out article. Thank you very much.

  23. Is there anyway I can return my EIDL loan money after accepting and signing the document of it? If want to buy a house can I apply for a loan to buy a house? Please answer.

  24. Hi Gerri
    You are very knowledgeable and very fortunate to have found you. Thank you for your time.
    The SOP that was posted recently dates back to May 2018. I’m concern some may not apply due to the Covid pandemic. But thank you for the dry reading. My first question:
    1) I will need further funding, what is the best way whereby I can obtain a loan or grant (preferably a GRANT) for my business? I’m a business with a payroll of one and lot of expenses (100% payables w/recievables of less than 10%) (Had alot of volunteers with the business. Not a non-profit)
    2) I did receive an EIDL loan, I can prove 100% of the loan was applied toward my business, do I have to repay this loan? Heard it can be used as a forgivable loan? Can you validate this claim?

    1. Thanks Michael for the kind words.
      1. There are some state local organizations making grants. Your local SBDC or SCORE would be a great resource for that information.
      2. EIDL loans are not forgivable. (The EIDL grant does not have to be repaid.) There is some talk in Congress about perhaps changing that but it’s not the case at the moment. Contact your elected officials in DC if you want to see this happen.

  25. Thank you for this and other articles.

    I understand you can receive both an EIDL and PPP loan, but can’t use them for the same purposes.
    Can you use the PPP to pay salary for the covered period, and the EIDL to pay salary AFTER that period?
    Or, if you have used the PPP to pay salary, then can you not use EIDL for salary no matter what the timeframe?

    Thank you!

  26. Thank you for all of this information. Here is my situation….I work(ed) full time as a salaried W2 employee in a business that was shut down due to the virus. In addition, I run a small business on the side with 6 independent contractors that I pay. This business has also been shut down due to the virus.

    I am receiving unemployment for my W2 income. I have recently applied for and received a EIDG and EIDL for my small business. At the time, I couldn’t find any information that indicated if the EIDG/EIDL would effect my unemployment.

    Do you have any advise for me? Thank you in advance!

  27. Single member LLC, I normally don’t take a draw, depending on profits. No salary taken, schedule C filed for my self. Right now I don’t need a draw. Can I still take funds specific to dividends / draws?

    1. Greg, As I stated in the article the SBA says:
      “EIDL proceeds may not be used for:
      Payment of any dividends or bonuses;
      Disbursements to owners, partners, officers, directors, or stockholders, except when directly related to performance of services for the benefit of the applicant;”

      Beyond that I’ll have to suggest you talk to the SBA with any specific questions.

  28. I am a truck driver (owner operator) and recently applied and was accepted. My lease on my truck is coming to an end and I have a balloon payment. Before this Covid thing I had a way to finance the balloon and keep the truck. I’ve used up my savings but still remained able to work when loads came up. Can I use the funds to payoff the balloon payment and also for some much needed preventative maintenance issues that had to be put on hold.
    Thank you.

  29. RE: Is There a Deadline to Spend EIDL Funds?

    Thank you for all your valuable info and keeping this up to date.

    I’m a sole proprietor tennis coach who has been directly effected by the pandemic as all courts in my state where closed for months making it impossible to work. I am finally able to rent court time again to give lessons but it now appears they may close again any day due to the recent surge in new cases/hospitalizations in my county. It’s a day to day situation so I decided to accept the EIDL ($6,000) to pay some bills now but mainly in the event we are shuttered and with the likelihood their will be a next wave in the fall which is only 4 months away. I do have UI but when I report even minor earnings my benefit is less than $100 for 2 weeks even with the temporary $600 from the fed so that’s useless.

    Your answer to the question “Is There a Deadline to Spend EIDL Funds? ” seems to slightly conflict with the first part and you provided no “VERDICT”:

    You state – a borrower who doesn’t need it should consider returning the funds conflicts with the prior statement “It seems reasonable that business owners may continue to use those funds for as long as the crisis continues to impact their operations. & “The COVID-19 economic crisis is an ongoing crisis and we don’t know when it will end. It seems reasonable that business owners may continue to use those funds for as long as the crisis continues to impact their operations.”

    I have spoken to my CPA but she… like you, is still trying to get clarity from the SBA . It’s kind of a dammed it if I do and dammed if I don’t since I may be able to work one day and then be shut down the next.

    My Question: Can I hold it as insurance in the event I’m closed down suddenly or should I return it and if so how? I could use some of it now but I really prefer to wait until it’s my ablsolute last resort. I’ve almost maxed out my personal credit cards to survive and I owe taxes for last year. I also want to point out… its a 30 year loan I’m paying interest on along with a origination fee … Any helpful advice is much appreciated.

    1. I don’t know unfortunately. Many SBA regional offices are holding office hours to answer questions about these loans and that could be a good opportunity to get an answer to your question. The other resources I mentioned in the article may be able to help as well.

      1. Hi i am rideshare driver and i have my car loan from td bank which i used for rideshare business only can i paid off that loan using sba eidl loan or not ? Thank you

      2. I was using my home but during covid I would like to move my operations outside my house in oder to keep my family safe during the pandemic. Can I rent a temporary location?

        1. It seems like a plausible use of funds. (Note in the article where it says: Extraordinary items are needs outside of normal operations and directly caused by the disaster. Extraordinary items can include: (1) Temporary rent or storage fees, additional advertising costs, etc.; ) But I’d recommend you check with the SBA to be sure.

      3. SBA representative told me the only thing you can pay for short term loans (speaking business credit card)is the Min pay min. of the credit card, Also only salon phone not your cell phone. also here is the SBA Phone number 1-800-659-2955…#1 for english #2 how the pandemic has effected my business.

      4. I am a family childcare provider who operates in my home. I woukd like to use the loan to continue with a establish a safe place to continue operating my family childcare in my home. We had started to renovate the garage prior to covid 19 and would like to use this money to.complete the project based on safety protocol. Is this allowed.

      5. Good morning I need help with my business not able to get in touch with anyone concerning this matter all lines are busy and my business is continually going down