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SBA: EIDL Use Of Funds Requirement & Rules



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The SBA-guaranteed Economic Injury Disaster Lending (EIDL) program is a loan program that is accessible to small companies, small agricultural cooperatives, and the majority of private organizations in disaster areas that have experienced significant economic loss.

Prior to the pandemic, the loan program provided low-interest loans to companies and households impacted by natural catastrophes like as wildfires, earthquakes, and storms.

More than 1.7 million EIDL loans have been authorized by June 2020, and the figure is still growing.

The highest amount you may get for an EIDL loan is $2 million, and the maximum interest rate is 4%.

EIDL Loan Use Of Funds

EIDL money can be utilized for working capital and routine operational expenditures such as health care benefits continuance, rent, utilities, and fixed debt payments.


Applicant must be physically situated in the United States or a specified area and have experienced working capital losses as a result of the coronavirus pandemic, not as a result of an economic slump or other factors.

  • Businesses with 500 or less workers are considered small by the SBA.
  • Cooperatives with 500 or fewer employees
  • Agricultural enterprises with 500 or fewer employees
  • Most private nonprofits
  • Faith-based organizations
  • Sole proprietorships and independent contractors

Businesses engaging in illicit activities, loan packing, speculation, multi-sales distribution, gaming, investing, or lending are ineligible.

The SBA is broadening the COVID EIDL eligible uses of profits to include payments on all types of company debt, including loans owned by a Federal agency (including the SBA) or a Small Business Investment Company (SBIC) regulated under the Small Business Investment Act.

COVID EIDL loan funds may be used to make debt payments, including monthly payments, deferred interest, and prepayment of business debt, with the exception of debt owed by a Federal agency (including the SBA) or an SBIC.

The SBA is implementing a new regulation stating that organizations within a single corporate group may not obtain more than $10,000,000 in COVID EIDL loans in aggregate.

Entities are considered part of a single corporate group for the purposes of this restriction if they are majority owned, directly or indirectly, by a common parent. Businesses are subject to this limitation even if they are in certain hard-hit industries and are permitted to apply the per-physical location application of the size requirement as specified in 13 CFR 123.300(e) (5)

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