Small businesses have been receiving communications (mainly, via email) that the EIDL has been approved and to complete the next steps on their website. Once you complete the process, you need to comply with their requirements and allow access to your books (“for the most recent 5 years until 3 years after the date of maturity, including extensions, or the date this Loan is paid in full, whichever occurs first.” )
No collateral if the loan is under $25,000. If over $25,000, there is a general collateral clause in the loan agreement.
Personal guarantee required for loans over $200,000.
Eligible expenses
- Fixed debts (rent, etc.)
- Payroll
- Accounts payable
- Some bills that could have been paid had the disaster not occurred
Ineligible use of the loan (slides 10 and 11 of EIDL Presentation)
- Dividends and bonuses
- Disbursements to owners, unless for performance of services
- Repayment of stockholder/principal loans (with exceptions)
- Expansion of facilities or acquisition of fixed assets
- Repair or replacement of physical damages
- Refinancing long-term debt
- 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
- Payment of any part of a direct Federal debt, (including SBA loans) except IRS obligations
- Relocation (however, you can request written consent to relocate)
SBA guidance – EIDL Presentation – https://www.sba.gov/sites/default/files/articles/EIDL_and_P3_4.1.2020_FINAL_2pm.pdf
