EIDL Loan: What Can You Use it for? | The Kwak Brothers

EIDL Loan: What Can You Use it For? (Do’s & Don’ts)

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EIDL Loan: What Can You Use it For? (Do’s & Don’ts)


Hey everyone, it’s Sam Kwak here and a lot of you guys have been asking me… Sam, what can I use the EIDL loan for? Can I pay off my mortgage with it? Can I buy a new truck? Can I buy new rental properties? Can I pay myself with it?

Watch This Article in a Video: https://www.youtube.com/watch?v=wn69aTgE3Yg

Well, in this article, we’re going to break down exactly what can you use the EIDL loan money for and what you cannot use it for.

The CANs..

Okay, so let’s first break down what you CAN use the EIDL Loan money for:

What You Can Use For:

  1. Business Operating Expenses
    a. Rent & mortgage payments (Not early payments)
    b. Payroll
    c. Virtual Assistants
    d. Independent Contractors
    e. Accounts Payable
    f. Utility


Now, let’s go into the list of what you can’t use the EIDL loan money for:

What you Cannot Use For:

  1. Distribution of dividends to Owners, Loaning money to self, cannot loan to other businesses
  2. Expansion of Business
  3. Paying off mortgages early
  4. Buying new properties
  5. Buying a new car

The Consequences

How would SBA know and what are the consequences of misuse…
The SBA requires strict bookkeeping, record keeping, as well as maintaing a ledger of receipts, invoices, ; pretty much all records of how the money was spent.

The SBA has the right to audit your business books by making you hire a CPA to furnish the reports to the SBA. If the SBA deems that you’ve violated the loam agreement and subsequently you default, the SBA has the right to call the entire loan due.

If SBA deems that you’ve lied, cheated, or misrepresented your business when getting the loan, you can be liable for a penalty of 100-150% of the loan amount.


So there you have it guys, hope this video helps with understanding what you can and cannot use the EIDL loan money for!

If you liked the breakdown and want to see more updates, be sure to subscribe to our YouTube channel! And check out some of our other videos on buying rental properties and real estate investing!


  1. Allan Everson says:

    Do you know if the EIDL loan can be used for IRS Taxes and any back Taxes?

  2. Tashia Banks says:

    Hello. I have a question: I was wondering if I can use my SBA EIDL LOAN to purchase a new cell phone. I don’t want anything fancy, but I desperately need a new one! I don’t want to buy one with he loan money to find out later that it doesn’t fit into the “working capital” criteria.

    Tashia B

    • Sam Kwak says:

      Unfortunately, you cannot. A cell phone would be considered a fixed asset purchase. So it won’t qualify.

  3. UNISHA C MOORE says:

    Can you use the ECDI to purchase business computers?

  4. Maria Rowe says:

    Hello there, can the EIDL be used to pay off credit cards that I pay through my business? j

  5. A.W says:

    Does your business have to be licensed and registered with the state, to be considered ” a legitimate business ” in order to use the EIDL loan funds. I have had a EIN number since 2018, working as a independent contractor ( elderly caregiving services) off and on, besides working another full time job. If so can the funds be used to cover the fees of the licensed and registration?

  6. MO says:

    Would purchasing Quickbooks software be considered a business operating expense?

  7. Derotha Watford says:

    Can you pay for Internet and telephone service?

  8. Ira Robinson says:

    I understand I cannot purchase a new car, so are repairs to the one we currently use for business travel considered a valid business expense?

  9. Careese says:

    hello can paying a CPA be a qualifying payment to use the loan money for…

  10. Ross Lendon says:

    I know I can not buy a Computer with edil money but can I buy components to up grade my existing equipment.

    • Sam Kwak says:

      You cannot. An upgrade is considered a capital improvement. If it’s broken and you need to replace it, you may be able to use the EIDL funds to replace the computer

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