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

INTRO

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

The CANNOTs…

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.

CONCLUSION

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

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