EIDL Loans and Other SBA Disaster Loans

EIDL Loans and Other SBA Disaster Loans

EIDL Loans and Other SBA Disaster Loans

The Small Business Administration (SBA) approved over $390 billion in COVID-19 Economic Injury Disaster Loans (EIDLs) to help small businesses during the pandemic. This was an SBA disaster loan, and COVID-19 EIDL loans are low-interest loans with a 30 year repayment period. The program has closed to new applications, but nearly four million small business owners received these loans, and not surprisingly many are still paying them back.

Some small business owners are confused about how they can use funds from their SBA 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?”Let’s explore how to use these funds correctly, how to manage them responsibly, and other questions surrounding EIDL loans.

Let’s explore how to use these funds correctly, how to manage them responsibly, and other questions surrounding EIDL loans.

What We’ll Cover

Many business owners, including the sole proprietors and independent contractors who got these loans, have never used a government loan program like this before and 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

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 using your loan proceeds, we recommend you ask the SBA. 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.) You can also talk with your legal or financial advisors.

What Exactly Can I Use EIDL Funds For?

The SBA states that SBA COVID-19 EIDL loan funds may be used for:

“Working capital to make regular payments for operating expenses, including payroll, rent/mortgage, utilities, and other ordinary business expenses, and to pay business debt incurred at any time (past, present, or future).”

While the SBA published some guidance describing how EIDL proceeds may be used (and has updated that over time), it never published a guide for business owners describing how to use EIDL loans. The guidance the SBA did release was rather broad and it did not spell out every situation.

If you really want to understand these loans, you have to look at the history of this program.

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. Disaster loans often make national headlines when a natural disaster hits an area, like when Hurricane Ian destroyed part of Florida. 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 small business owners 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.) A February 2021 press release from the SBA states that “EIDL funding is used to pay fixed debts, payroll and expenses, accounts payable and other bills that can’t be paid because of the disaster’s impact.”

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.”

Ineligible Use of EIDL Funds / What You Cannot Use EIDL On

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 (SBA later made an exception here; see that change described below)) 
  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. The business owner who posed the following question says she hadn’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 for the work in the business appears to be a reasonable use of these funds. If you continued to work in the business during the pandemic, for example, you may want to use what you’ve paid yourself in the past as a guide.

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 who received Paycheck Protection Program (PPP) loans and were self-employed, for example, used their net profit on Schedule C Line 31 of their tax return and divided it by 12 to determine their average monthly payroll. (Later the SBA allowed self-employed borrowers to qualify based on gross revenue, instead of net profit.) 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

2. Can I Use EIDL to Pay Off Debt?

COVID-19 EIDLs carry a 3.75% interest rate (2.75% for nonprofit organizations) which makes it less expensive than other types of unsecured small business financing available. These low rates have led many to ask whether they can use these funds to pay down or refinance other small business loans.

“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. (Keep in mind you should only use EIDL funds for business purposes, such as paying off business credit cards, and not to pay off personal credit card debt.)

In the past, SBA guidelines appeared to prohibit paying off or refinancing long-term debt with EIDL proceeds. That changed.

Good news! The SBA announced September 8, 2021 that it expanded the allowable use of funds to include paying most debts, specifically:

…SBA is revising the regulation at 13 CFR 123.303, “How can my business spend my economic injury disaster loan?”, to permit COVID EIDL working capital loan proceeds to be used to pay any type of business debt, including loans owned by a Federal agency (including SBA) or an SBIC. SBA also is revising the regulation to clarify that COVID EIDL loan proceeds may be used to make debt payments including monthly payments, payments of deferred interest, and pre-payments, except that prepayments will not be permitted on debt that is owned by a Federal agency (including SBA) or an SBIC.

SBA Interim Final rule September 8, 2021

Verdict: Yes, except to prepay certain federal debts

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

We received questions from entrepreneurs whose businesses were not likely to survive the pandemic downturn and wanted to know if they can use funds from one of these loans 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 funds 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 wanted 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 still creating problems for some businesses. 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 may want to consider returning the funds. There is no prepayment penalty.

What’s Best Practice for Tracking the Use of My EIDL Funds? 

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.

If you use accounting software, you can put a note “EIDL” on those expenditures and keep a file or attach receipts. If you don’t use an accounting program it’s a good idea to keep a spreadsheet listing how you spent these funds. It can also be helpful to keep these funds in a separate business bank account for tracking purposes.

What Other Grants and Funds Are Available in 2024 for Small Businesses?

If you’re looking for other grants or funding to cover your business’s financial obligations but aren’t sure where to start, check out Nav’s comprehensive guide to small business grants in 2024. We cover which companies, foundations, and U.S. government agencies are giving business grants this year.

You’ll also learn about resources to search for other grants that fit your business as well as how to apply when you pick the grants that will work for you.

Frequently Asked Questions About Ways to Use An EIDL Loan

This article was originally written on July 1, 2020 and updated on February 21, 2024.

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214 responses to “EIDL Loans and Other SBA Disaster Loans

  1. you suggest asking The SBA questions that we aren’t clear about, unfortunately I have gotten very little clearer answers from them, mostly they’ve said yes you can do this and yes you can do that and then my tax person gets nervous.. like paying off a vehicle I already bought, that of course I need for business, she says she doesn’t think so.. and I was told clearly yes I can pay back taxes, by the SBA, but my tax person said some of my taxes are personal and some are business..i’ve had a heckuva time getting any clear answers for many months

  2. Thank you for a very well written article. I have a question regarding EIDL loan. I want to sell my business which has an EIDL loan. Can I transfer this loan to the new owner. Thanks for your reply.

  3. Is it possible to use SBA EIDL loan to pay off a commercial real estate mortgage? Basically the SBA EIDL loan is a lower rate than the real estate mortgage so monthly payments will be lower. Is that allowable? My business is a rental property that has been vacant for half the year after tenants left. Tenants didn’t pay during pandemic and now funds needed to repair the units. Can EDIL loan be used to make repairs and pay off the mortgage?

    1. You’ll see in the article that the SBA updated guidelines to allow for the prepayment of most debt. (See the callout in the article.) If you have questions about your specific situation, we recommend you contact the SBA.

  4. Hi!
    Right now, our business is renting 2 units. Our monthly rent went up. Can we use a portion of the funds to get our own property, and move our operation there?

  5. I am a sole proprietor, I understand that I can pay business IRS obligations with the EIDL but can I use SBA funds to pay “personal” IRS taxes that were unpaid during the pandemic due to lack of avail funds at that time?

    1. My suggestion Tom is that you check with the SBA. I’ll note that many sole proprietors are paying themselves (usual compensation) with EIDL funds so it may make more sense to just pay that out of your personal funds. But again, I recommend you check with the SBA for specific questions as we can’t speak for them.

  6. When I got my Eidl loan I called SBA and ask them can I buy a car since I am driving for Lyft or Uber ,?
    Rep said you can buy a car as long as promote your Bussines.

  7. Hello,

    I’ve posed this question several times to the SBA, the only response I get consists of the terms of use, copied and pasted to a response email.
    Can you help ?:

    My entity (C-corp) that is requesting the EIDL loan is operating from a building and pays rent to a separate entity (LLC) that owns the building. Because of Covid and other business expenses, the entity requesting EIDL funds (C-corp) is behind on rent payments. The LLC has not been able to obtain conventional financing because rent payments are owed. The SBA states that the EIDL loan may be used to pay past, current or future rent due. So technically, the funds would be used correctly.

    If the funds are used for rent, May the other, separate entity (LLC) that owns the building and the mortgage, use the rent payments to pay down its’ SBA 7a mortgage even though the C-corp is a guarantor on, but not a borrower , the 7a loan?

    1. I believe the problem is Judy that there is not an exhaustive list that addresses all scenarios. The guidelines for EIDL generally can be found in this document. In addition, the SBA recently allowed EIDL funds to be used to refinance certain types of debt. You can read the IFR with the expanded use of proceeds here. Because I don’t work for the SBA I don’t feel comfortable commenting on a specific scenario – I’m sorry!

  8. Hi Gerri,

    I have 3 questions:

    1) I received the EIDL loan in December 2020. I’m a Uber driver (sole propriteor). I’m currently not driving because of the pandemic. I like to resume when situation gets little better. Can I pay my self from the proceed. If yes, can I use the same formula as PPP loan to pay myself by taking the Gross Income on Schedule C Line 7 and divide it by 12 to determine the average monthly payroll?

    2) I’ve been using the proceed to pay my monthly car loan and phone bill so far that I use for my business. I have a 8% APR on the auto loan that I use for Uber driving. According to new changes on SBA website, It states that proceeds can be used and to pay business debt incurred at any time (past, present, or future). Can I payoff my car loan at once instead of paying monthly payments to save on high interest?

    3) I have an older car with high miles that I drive for Uber, can I trade-in my older car to buy lower mile car to drive for Uber with the EIDL loan proceeds?

    Thank you so much in advance for answering.

    1. Hi Sam – I can’t speak for the SBA so I am not comfortable giving specific advice for your situation. I recommend you reach out to the SBA or one of its resource partners. This article describes how to get help with your questions about EIDL.

      1. Hi Gerri, Thanks for responding. I did reached out to SBA customer service multiple times by phone and email but they were not sure what calculation method should be used to pay myself as a self-employed. Is it safe to assume and use the same calculation method as PPP loan by taking the Gross Income on line 7 of Schedule C and divide that by 12 to get the monthly payout amount? Thank you.

        1. I wish I could say but I haven’t found a specific formula, unfortunately.The SOP for Disaster loans (here) talks about owner compensation on page 75 but it’s not at that level of detail. Your approach sounds reasonable to me, but again I don’t work for the SBA.

  9. Started a business back in 2019 covid-19 hit and it failed in july2020. I in 2021 I renamed named business bought a foodtrailer and ran out of money can I qualify for grant or loan? I never filed a schedule c.

    1. Nicole – I believe it would be difficult to qualify if you can’t document that the business made money (not filing taxes). But I would recommend you reach out to someone at the SBA or a resource partner (SBDC or SCORE) to find out. I don’t want to speak for the SBA.

    1. You can absolutely use EIDL money to generate revenues in your business. It can be used to cover normal working capital expenses. If you are still having trouble understanding how to use these funds in your business, I recommend you contact your local SBA resource partner (SCORE or SBDC for example) for free help.

  10. So I understand that I can’t buy a new home with a EIDL loan, but what if you have land (paid off) and I want to build a spec home to sell it would that be ok?

    I am a construction contractor, and also have my business monthly expenses paid with EIDL money and would use my income as for those materials expenses. So my building expenses could be paid with a mixed money EIDL/business monthly income or possibly fully paid with the business monthly income.

    Example: My monthly revenue is 150k, and my (business only, not the new construction) expenses are 120k all going in and out from the same account.
    I would use 120k EIDL money to cover regular business expenses and 150k income to use in the new construction.

    I know it may be confusing but hopefully you understand my question.

    Thank you

    1. Luiz – We are not the SBA so we can’t tell you specifically what you can and cannot do with those funds. We recommend you check with the SBA or an SBA resource partner like SCORE or your SBDC.

  11. Thanks for the very informative article.

    Two questions, both relating the recent rule changes.

    1. Prepayment of principle on business debt is now allowed. Can we pay down the mortgage? Our interest rate is higher than 3.75%, and isn’t amortized for 30 years. Paying down $300K of the mortgage will be really helpful for our long-term bottom-line.

    2. Do these rule change apply retroactively to EIDL funds already received or approved?

    Thanks so much

    1. Hi Nathan,

      1. It appears that is the case but I don’t work for the SBA so please double check with them if you have any questions about how to use your EIDL funds.
      2. The Interim Final Rule from the SBA describes on the first page which changes are applicable when. It says: “The changes to the regulation at 13 CFR 123.303 apply to COVID EIDL loan proceeds available on or after September 8, 2021, without regard to the date such proceeds were received from SBA.” Later you’ll see that section refers to how loan proceeds may be used.

      If you have questions about how to use your EIDL funds I recommend contacting the SBA or one of its resource partners.

      I am glad you found this helpful!

      1. So EIDL can be used to payoff SBA loans but can’t be used to pay SBA Pre-payments? Seems contradictory.
        Do I read it as can be used to payoff the whole SBA loan or make SBA loan payments but NO SBA Pre-payments. Hmmm

        “ to be used to pay any type of business debt, including loans owned by a Federal agency (including SBA)”

        “ may be used to make debt payments including monthly payments, payments of deferred interest, and pre-payments, except that prepayments will not be permitted on debt that is owned by a Federal agency (including SBA)“

  12. Thank you for this very well explained explanation of how the EIDL may or may not be used. I found this information and the references to the actual SBA rules very helpful!

  13. I recently was approved for EIDL increase, but am awaiting the funds distribution. I took out $30k second mortgage loan, a $10k unsecured loan and used my credit cards to survive downturn in my business during Covid. Basically, I went from $165K gross receipts in 2019 to nearly $0 in 2020-21.

    Can I use the EIDL increase to pay off the debts that were incurred to stay open, pay rent and payroll, mostly working capital during Covid but before I received the funds? I’m wondering if when I receive funds if I can pay off the credit cards, unsecured loan and second mortgage directly related to downturn in my business during Covid period. Will paying off debt be ok if that debt was incurred during Covid. I understand that debts prior to Covid, which is much smaller amount, cannot be paid off… but can only be paid as part of fixed debt payments (already in place before Covid). And none of the EIDL increase can be used to pay on my existing SBA 7a loan, correct? Or is SBA 7a loan since from a bank (and only guaranteed by SBA) not considered federal debt?

    Thanks. Great information in this article. Appreciate you compiling it all for us.

    1. Hi Jeff – I am hesitant to advise on specific situations as I don’t work for the SBA. The guidance I shared in this article came from the Standard Operating Procedures for Disaster Loans which you will find here. You’ll see the guidelines starting on page 75. Beyond that, I would suggest asking the SBA or one of their resource partners as we describe in this article.

  14. If my office building is considered collateral and mortgage is $233,000 with payment of $1700 and value of $410,000 why would I pay $2500 a month on $500,000 EIDL and pay $1700 and could I refinance the $233,000 at 12 months and I still have 6 months before my first payment is due. The only long term debt with the office is the SBA loan and all other debt is operating expenses and for some reason if I needed to pay back the SBA loan I would just sell the office building because in a few years it will be worth $500,000
    Do you think the SBA would approve this scenario or is there a better way to ask.

  15. I am planning to earmark EIDL funds to pay for work done by independent contractors (1099). Although their work was directly responsible for new revenue, can I still label payments from my company to them as coming from the EIDL money?

    1. I don’t see why not – it seems like a normal use of working capital. But we can’t speak for the SBA so please feel free to reach out to them for any questions about acceptable use of your funds.

  16. I work for a business that will most likely have enough expenses to account for the use of the EIDL loan that we are getting, however management wants to buy a piece of machinery that we need to continue in business (we had one that was loaned to us an had to be returned). Our accounts will show the deposit and a large amount going out for the machinery, but overall there will be enough expenses. Do you think this will be okay? Thanks, this was a great article, btw.

    1. I do’t see why that would be an issue but I don’t work for the SBA so feel free to check with them or one of their resource partners if you have questions. Unfortunately there is not a lot of detailed guidance on this topic. And thanks for the kind words Susan!

    2. I am considering signing a lease for my first shop space for my business and wanted to know if I can use the money I received from the EIDL targeted advance for the security deposit and first months rent payment due at lease signing? I would have had the money for this already if my business didn’t suffer during Covid. I have read about funds not being able to be used for “relocation” and I’m wondering if you have a broader understanding of that term? Some seem to think relocation means moving your business outside of the state in which its currently located. Others seem to think it merely refers to a change in your business address regardless if it’s in the same county. Others lump it together with the term “expanding your business”. I have never had a brick and mortar for my business and would have had the opportunity to sooner if covid didn’t happen, so I am viewing the use of this money towards first months rent and security on my first shop space as part of my working capital. My accountant tells me I am OK to use the targeted advance to acquire the new shop space but I’m looking for a second opinion. Trying not to misuse these funds! Thanks!

  17. Hi Gerri,

    As a sole proprietor, I have received an EIDL loan twice. Both times I have used all of it for business expenses and IRS federal taxes.

    Is it true that I wasn’t supposed to use the funds to payoff any federal debt? Sadly, I never intended to misuse of funds. Can you please provide any recommendations? Thank you in advance!

    1. Monica – please re-read the part in the article that says: 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.)

  18. Hello. I’m a single member LLC and recently received an EIDL loan. I am planning to pay myself by dividing my net income from Schedule C for 2019/2020 by 12. Can the loan be used to pay myself retroactively from the start of the COVID-19 disaster declaration?

  19. Hi Gerri,

    Thanks for your insights. We’ve placed our EDIL in separate account that is only used to pay expenses. Our revenue is deposited into a different account. I’ve seen different interpretations of whether we can use our Revenue for items excluded from use from the EDIL. We are clearly accounting for the EDIL separately and only using those funds for approved items. What is your perspective on how we can use our revenue account? Two examples, we have created a new brand and we plan to separate the IP into a new LLC and create a separate marketing company which will lease the IP and feed sales leads to our parent company. These will be new assets and may be a prohibited use of the EDIL. Additionally, could funds from the revenue account be invested as they are accounted for independently of all loan proceeds? Your opinion is greatly appreciated.

    1. Matt – I’d like to help but I don’t work for the SBA and don’t feel comfortable commenting in that level of detail. (Remember EIDL was not the popular and extensive program it has become when COVID hit so there isn’t always guidance that addresses all scenarios.) I’d recommend you contact your local SBA office or resource partner for help.

    1. I can’t speak for the SBA but generally materials for the business are normal working capital expenses. If you have specific questions I’d encourage you to reach out to the SBA or an SBA resource partner such as those described in this story.

  20. Please tell me if this is right or wrong.. A friend has a business he wants to sell me. He has an SBA loan for 150K payable in 10 years and just got another one for recently for 250K payable in 30 years. He wants to sell me the business for 400K. But says, I don’t have to pay him anything. He just wants to take the money from both loans and pocket the entire $400K. In return I keep the business and pay the loans off. This feels wrong for some reason. Please let me know your thoughts.

  21. After the “emergency” is over will we have to return any unused portions of our EIDL grants?

  22. Sadly my wife and business partner acquired a 150k EIDL and then decided to move the funds into a separate account. She since has left the marriage and stated that she is the signatory of that loan and could not trust me to pay back the installments, I’m more concerned about the legality of the moving of the funds for her sake. However, she won’t respond to my questions of what she is planning to do with the money.
    Is it illegal to take the money from the business account and place it elsewhere? Thank you.

  23. As a sole proprietor I’ve looked high and low trying to find expert advice on how I can use the EIDL for my small trucking company.

    Do you have any resources available?

    For example, what’s the formula I would use to pay myself? And how long can I pay myself? Can I pay myself a lump sum based on my 2019 Schedule C, Line 31?
    Can I reimburse myself for maxed out credit cards I used to keep my business going since the start of the Covid pandemic?

    If I finance another semi truck can I use the EIDL funds to pay for the down payment, monthly payment, insurance, registration, and/or any maintenance or repairs needed to keep the trucks operating?

    I would appreciate it if you could help me or point me to someone who could. Thank you for this informative article. I only wish there were some kind of industry specific guidelines we could follow to keep us out of trouble with the SBA.

  24. Hi Gerri! Thank you for this very informational article.

    I am an Uber/lyft driver and was approved for over 100k. I know I can pay insurance, gas, repair etc…with it but Is it okay to use part of that money to just PAY OFF MY CAR which is over 20k?
    And also I have about 18 months before starting to repay it back, if I would decide to invest that money and pay the whole amount back even before the deadline (that 18 months), will that matter to the SBA how I invested it ?

    Thank you.

    1. Jeff – According to SBA guidelines, refinancing long-term debt is not an acceptable use of EIDL funds. Similarly I would not invest the funds without checking with the SBA. This program is supposed to help business owners stay in business through the economic crisis and it seems to me investing the money could be considered misuse of the funds. I can’t speak for the SBA though so I recommend you check with them.

  25. Hi…I am sole proprietor and my business is a fitness training business..to keep my business afloat, with gyms closed and unable to travel or go to client homes, I had to do more online (I was doing some before covid) which meant buying equipment to be able to demonstrate to my clients what I wanted them to do. Can I reimburse for the credit cards used? Also, am I able to reimburse for utilities that I borrowed from my savings to stay afloat?

    1. Hi Nic – Credit cards are considered short term debt so I would imagine paying those would be fine, but I can’t speak for the SBA. As for reimbursing yourself for money you paid via savings, the guidelines don’t get that specific. I’d suggest you talk with the SBA or an SBA resource partner like your SBDC if you have questions about how you can use your EIDL funds. I detailed those resources in this article.

      1. Hi,
        I own an online jewelry co. I ran out of supplies due to the shortages during the pandemic. I got approved for an edil loan can I use those funds to buy more supplies? Can I side the funds to advertise ? Thank you!

        1. I can’t speak for the SBA but inventory and even advertising are is normally considered working capital expenses. If you have specific questions I suggest you reach out to the SBA or an SBA resource partner such as your SBA local office, SBDC or SCORE. All may help for free. Read more here.

  26. Hi Goodmorning I had a quick question regarding EIDL loan. If I received 31800 can I borrow from that money and later replace it. I mean what if I have an outstanding payment to make can I take 10 000 and but it back without any penalty.

    1. Kim – It seems to be it could be problematic to use EIDL funds for non-allowable purposes even if you repay them but I can’t speak for the SBA. Ultimately I don’t have an answer to that question as it’s not something detailed in the guidelines. I would recommend you reach out directly to the SBA. If they can’t help an SBA resource partner may be able to help. This article details options for getting help with EIDL loans.

  27. Hi Gerri .. Thank you for your time to help and answer all of us.
    Please notice in the EIDL agreement its states:
    Kindly explain. And what if we do make disbursement after 6 months?

    2- I’m a sole owner company (Engineering Consultation) Let’s call it Business “A”, I partnered with another person (same business/industry) Company “b” can i use the money i got from SBA EIDL under business “A” to to pay salaries for Business “b” or it that consider expanding business?

    Thank you

    1. Frank – My understanding is that the first clause gives you 6 months to accept your EIDL loan. For the second question, I would be very careful. Spending those funds on a different business could be problematic. This article offers some suggestions for getting help with your EIDL loan.

  28. Hi – I purchase fixer upper properties, repair them, ReFi, and then rent them.
    1) can the loan pay for rehab costs?
    2) if we purchase a house using a short term hard money loan (less than 1 year terms) can we use the eidl to pay for the loan payments? What about for the lump payment the short term lender usually asks for?
    3) we have a roof that needs to be replaced now on on of our older properties. To me repairs ARE day to day expenses with rentals, but it says no repairs…

    1. I can’t speak for the SBA so I can’t advise about specific uses of funds. But keep in mind the purposes of this loan. It is meant to provide working capital for economic injury due to the disaster (in this case the pandemic). Based on what you are trying to do those expenses could be problematic. (Not saying they are but could be.) I would strongly recommend you reach out to the resources in this article to get the specific answers you are looking for.

    2. Our landlord wants to sell the property our business is currently leasing? We received the EIDL can we use some of it to purchase the real estate from him. If not, we won’t have a business to spend the money on. And since you can’t relocate it could be an ever bigger issue.

  29. I received an eidl loan and was unclear about so much, while most of this loan has been spent, if only say 90% of this loan was spent correctly and 10% unintentionally spend incorrectly, what are the consequences? Thank you for this article!

  30. Hi I’m a gig worker…
    I gotten in my eidil targeted advance loan of the 9K
    I read everything on the blog so if my understanding is correct “I should be able to do the following”

    I rent my car cost me 1K a month which includes the car insurance.”
    Business is slower so can I pay myself the offset amount I normally make a month.
    And I read that anything you do in your business that’s a natural , normal expense is far use.
    I’m thinking I should open up a new account just to manage the eidil funds


    1. That sounds reasonable to me. I can’t speak for the SBA though so if you have specific questions I recommend you speak to the SBA or a Small Business Development Center (SBDC) advisor or SCORE mentor. They offer free counseling to small business owners. Find your local help here.

      And yes I would encourage you to open a business bank account to manage and track these funds.

  31. I know we are not allowed to buy equipment with this loan. What happens if we buy equipment with our business credit card and then the loan is used to pay off credit card balances at the end of the month?

    1. Roland – the guidance doesn’t go into specifics like that. Keep in mind the overall purpose of these loans is to help businesses survive a disaster and to meet the normal operating expenses that they couldn’t pay due to the disaster. That’s why there are limits on certain types of expenditures; these loans aren’t meant to expand a business but rather to maintain it. For your specific question, I recommend you talk to the SBA or one of the SBA resource partners such as your Small Business Development Center.

  32. Have a trucking business and the motor blew in the truck. I need a new motor. Can i use eidl to pay for that?

    1. Andrew – It seems that would be a normal working capital expense that should be covered, and it’s not on the list of prohibited uses, but we can’t speak for the SBA. You could share this article with your accountant for their opinion. Or you can reach out to the SBA if you’re not sure how you can use your loan proceeds. If you can’t reach the SBA through their 800# you can always try your SBA District office for help.

    2. Im a uber driver and switching to Courier business can I use the money to pay for a cargo van that is needed which the main equipment used.

      1. Marcus – I would recommend you speak to the SBA. My understanding is no you can’t purchase a van outright with the EIDL funds though you may be able to use it to make payments. However, I do not speak for the SBA so I’d recommend you contact them or a resource partner. More info here.

        1. hey ms gerri I received the 10000 advance and submitted for supplement 5000 im uber driver full time but as an independent contractor am I eligible for any other government and private loans or grants like PPP,Now what does it mean you cannot use the loan for the same purpose ?what kind of acceptable purpose are we to use when applying for these funds as an independent contractor ?

          1. Unfortunately PPP is now closed. There may be other state or local programs available – I would recommend you contact your local SBA resource partner for more information. The fact that you are an independent contractor does not change how you can use EIDL funds. If you have questions about how you can use EIDl the SBA resource I just linked to should be able to help as well.

  33. Is these EIDIL loans forgivable during the pandemic?
    As long as it goes towards the business ? And if you can’t get a loan because no fund in SBA or PPP who
    Would you recommend that give low interest loans ?

    1. EIDL loans are not forgivable. The business must repay them. PPP loans are still available – I am not sure I understand your comment about no fund. As for other small business loans, Nav can help match your business to other loans but whether or not they will have a low interest rate will depend on an number of factors including credit scores, revenues, time in business etc.

  34. Can I use this money to buy parts on online and resell them on ebay? My business is buying and reselling videogame consoles and videogames as well as clothing and laptops. Can I use this money to pay my internet bill since i need my internet. Can I use this to pay my light bill? My business is from home.

    1. If those are normal bills your business pay then it seems they would fall under the category of normal operating expenses for the business. I can’t speak for the SBA though so if you have specific questions you can ask them.

  35. Hi Gerri, thanks for such great information. I know it says “paying fixed debt” is an acceptable use. Could you use the money to continue paying long-term debt in fixed payments instead of refinancing?

    1. My understanding is that making regular debt payments is fine. Since the SBA doesn’t spell all out all scenarios, I encourage you to check with them if you have questions about using your EIDL funds. Glad this was helpful!

  36. Hi! Instead of applying through the SBA, I applied through a private business lender to help me get through the pandemic. My payments are extremely high and I can not go on making that payment. I applied for an EDIL loan and was approved. Am I able to payoff the private loan with the EDIL funds? I got the private loan in Sept 2020 and it has a term of 12 months.

    1. Mark – I tried to tackle that question in #2. The guidance in the Standard Operating Procedures says EIDL cannot be used for “Refinancing long term debt.” Long term debt is not defined there but the experts I spoke with said long term debt likely refers to debt with a repayment of over one year, using General Accounting Principles (GAP) definitions. It seems it would be OK but I can’t speak for the SBA so I recommend you reach out to your tax or financial advisors or contact the SBA at 800-659-2955 or email disastercustomerservice@sba.gov.

  37. I am the sole owner of a S Corporation. I am the only employee and payroll myself a salary. I have been approved for a PPP second round loan and will receive those funds soon. I also applied for and already received funds from an EIDL earlier this month. I would like to hire an employee that could bring me more business. I understand I can only pay myself from the PPP funds (based on my salary from last year), but can I use the EIDL funds to pay a newly hired employee? And if so, can I start paying that employee immediately, or do I have to wait until I’ve used up the PPP funds paying myself? Also, if I CAN start paying the new employee immediately, once the PPP payments to myself run out, can I add myself to the payroll coming from the EIDL?

    Thanks for your article and your advice. It’s confusing out here!

    1. Hi David – It is confusing! The EIDL guidelines aren’t specific enough for me to offer advice on individual situations. I see no reason why you can’t use EIDL to pay an employee if that employee is supporting the ongoing operations of the business during the disaster but I can’t speak for the SBA. You may want to check with the SBA. You can contact the SBA at 800-659-2955 or email disastercustomerservice@sba.gov. In addition, many SBA resource partners such as SBDCs and SCORE are providing assistance with navigating these programs.

  38. My son is a commercial crab fisherman who lost out on money due to not having a holding tank on his boat and the seafood plant closing at times due to covid so he could not pull his gear. He also lost gear due to this. Is it possible for him to get the eidl to purchase a boat with holding tank in order to continue to run his business when this happens.

  39. I applied for the SBA EIDL loan back in June 2020. Late December I finally followed up and accepted the small loan. Completed all required documentation, was accepted ,approved ,and signed the paperwork on Jan 13th . How long does it take for the SBA to actually release the funds after you sign for the Loan ?

  40. I have a Business Loan(SBA LOAN) in payment.
    I got the loan 3 years ago(Total Maturity 7 years).
    May I payoff the principal of my loan with EIDL loan?

    I used this loan only for the business, not personal.

    1. John – I would recommend you check with SBA before you use EIDL to pay off your other SBA loan. It may not be permitted per points #6, 7 and 8 in this article. I can’t speak for the SBA – I would recommend you talk to them.

  41. I’m sorry if you’ve already covered this previously but we’re wondering besides the second round PPP if there’s any options or resources for us reapply mabe or request More funds beyond the $150,000k that we received last year

  42. This was truly the most helpful informational I have been able to find. Thank you so much for your insight!

    I applied for and received an EIDL loan this January and have had a difficult time navigating how to properly use it. The SBA site is very vague with its guidelines.

    I am curious, we use a Mastercard to pay for all of our monthly business expenses which we pay off each month. Is it acceptable to pay this with the EIDL to give us a little breathing room? We use that card to pay off our account at our building center and it is clear we cannot use the EIDL to pay the building center directly, so it seems to be a reasonable assumption that we could not use it to then pay for the Mastercard that paid the building center. Could you please offer some insight?

    1. I can’t speak for the SBA. My take is that the Mastercard is just a payment method. As long as you are using it to pay expenses that are normal working capital expenses I don’t see any problem using it to pay the expenses then using EIDL to pay the credit card bill. I suppose if you charged a new vehicle to the card they used EIDL to pay it off that could be an issue but otherwise I don’t see why it would be an issue. Of course you’ll want to track that. (I am not sure what you mean by “it is clear we cannot use the EIDL to pay the building center directly” – I am not sure what type of expenses you are referring to for the building center…?)

  43. I received an EIDL fund of less than $200,000.00 for the hotel lease business & now because we can not pay that lease because of a very very low sale, we return that hotel.
    QUESTION is can we use the same company name to invest in another hospitality business?

  44. Very helpful article Gerri. I now know though I was approved for a PPP loan that was utilized 100% to payroll costs, I may use the EIDL for payroll as well. However, being fearful of what expenses can or cannot be used, I have loaned my company several thousand in the interim to keep payroll, short term expenses and day to day expenses. Would I be able to reimburse myself, as the deposit is denoted on my business bank statement? Also, if I purchased a used vehicle with my personal acct. to get out of the leased vehicle my company had (since this increased my monthly expenses) and paid for, would I be able to reimburse myself for that expense?

    1. Shelley – I am not sure to be honest. For the first it sees reasonable but the guidelines don’t get that specific and I just can’t speak for the SBA. On the second expense I’m less confident. Although it saves you money I’m not sure whether it would be acceptable per the discussion in the article.

      I should add that I am not trying to inspire fear, and I assume the SBA is not either. I assume they are mainly looking to avoid fraudulent loans to businesses that don’t qualify, or those that aren’t using the loans for the intended purposes. At the same time they haven’t provided a lot of specific guidance on questions like yours. (I’ve used the Disaster Loan Standard Operating Procedures to write about this topic.)

      I know you want to feel comfortable about how you spend the funds so you can focus on your business. I’d recommend you either talk to the SBA or get in touch with SCORE or your SBDC to see if they have advice. Your accountant may be able to help.

  45. Great article. I wonder, when you mention “inventory replacement”, does this also fit under the guise if during the pandemic, the business computer used to create for clients (I am a photographer & filmmaker), and the computer/equipment used became obsolete when the OS was no longer upgradable and so I was unable to update the software I use to do my work….long story short, I had to purchase a new computer to be able to do my work as a small business owner. Does this fit within the guidelines of the loan?

  46. Great article! Thank you. I have a question. I have applied for an EIDL Loan. I’m an owner and employee of my business. Due to covid, I had to use my personal savings and retirement funds to keep the business afloat, pay our other employees, independent contractors and expenses. I’ve been a salaried employee of the business for several years. I stopped paying myself a salary in August to keep the business going. I’ve only had money going out and no funds coming in. But, I was able to keep my employees and grateful for that. Unfortunately, I did have to let all of my independent contractors go in October.

    I’m hanging on by a thread now. If I’m approved for the EIDL Loan, can I use some of the funds to pay a portion, or all, of the backpay owed to me, if there’s enough funds available for me to do so? Do I need to add my backpay onto Form 2202 Statement of Liabilities. Thank you.

    1. I’m so sorry to hear what you’ve gone through. The Standard Operating Procedures don’t mention back pay. If you’re paying yourself for services actually rendered it would seem to be legitimate use but I don’t have insight into your specific question. I’d recommend you check with your local SCORE or SBDC office – they are helping small business owners for free.

    1. We can’t advise you specifically though it seems that generally that car payments, insurance and gas would be normal working capital expenses for an Uber driver. Snacks (?) for customers may be normal working capital expenses. I’d suggest checking with your tax professional.

  47. 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!

  48. 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.

  49. 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.

  50. This helps. I would like to use loan proceeds to pay employees salaries, rent etc. This seems to be the case.

  51. 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.

  52. 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.

  53. 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.

        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.

    2. If we use the eidl funds to pay ourselves can we then pay for a new used vehicle if we drive for Uber or Lyft?

      1. My understanding is that you can pay yourself legitimately you can do whatever you want with personal funds. But I don’t speak for the SBA so please check with them about any questions you have about how to use your EIDL funds.

  54. 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.

  55. 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.

  56. 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.

  57. 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.

  58. 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.

  59. 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?

  60. 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.

  61. 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.

  62. 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.

  63. 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.

    1. Ana – Are those normal business expenses that your business pays or deducts on its tax returns? If not then it may be questionable. I’d suggest you ask the SBA or your tax professional.

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

  65. 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.

    1. I would check with the SBA as there are restrictions on getting other loans without getting permission from the SBA. (A business cash advance may be different but I’d check with them.)

  66. 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.

  67. 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?

  68. 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!!!

  69. 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.

  70. 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.

  71. 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.

  72. 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!

  73. Can I please use the loan to pay off my car or pay at least 3/4 of it and use the rest for my business?

  74. Can i used the sba loan for buy two car for my business like uber or taxi? And how can I document that ?

  75. 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!

  76. 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.

  77. 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.

  78. 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

        1. Hi
          U am an UBER driver an I recieved my loan.
          I had an accident that made me not able to walk for three months and can’t drive for long hours like I use to do.
          I have a medical issue and want to change my line of business.
          Tell me what I need to do.