How You Can and Cannot Use Your EIDL Loan
Editor’s note: At Lantern, we strive to help you make financial decisions with confidence. To do this, we occasionally feature content that includes information about our partners and their products or services. We do not provide, endorse, or guarantee any third-party product, service, information or recommendations—and our opinions are our own.
Share this article:
What Is the EIDL Loan Program?
What Does an EIDL Loan Look Like?
EIDL Loan Rules
Be a business, agricultural enterprise, cooperative, Employee Stock Ownership Plan (ESOP), or tribal small business concern with 500 or fewer employees or a sole proprietorship or independent contractor or a small private nonprofit Not be engaged in any illegal activity (as defined by Federal guidelines) Not derive more than one-third of its gross annual revenue from legal gambling activities Not be in the business of lobbying Not be a state, local, or municipal government entity nor can you be a member of Congress.
What Can EIDL Loans Be Used for?
Payroll Health care benefits for employees Rent Utilities Fixed debt payments Repairs Replacing inventory.
EIDL Loan Use Restrictions
Paying off old debts Refinancing new debt Buying capital assets, new construction, or vehicles Dividends and bonuses Disbursement to owners (unless for performance of services) Repayment of stockholder or principal loans (with certain exceptions) Paying a direct Federal debt (except for IRS debts)
EIDL Loan Use for the Self-Employed
Wages, commissions, income, or net earnings (capped at $100,000 per employee) Employee benefits (costs for vacation, family, or sick leave) Insurance premiums Retirement benefits State and local taxes
If You’re Considering an EIDL Loan
Employer Identification Number (or your Social Security number if you’re a sole proprietor) Organization type Gross revenues for 12 months before the pandemic Cost of goods sold for 12 months before the pandemic
Alternatives to the EIDL Loan
Equipment financing Invoice factoring and financing Lines of credit Traditional bank loans Business credit cards Merchant cash advances
EIDL Could Help You Through Tough Times
Frequently Asked Questions
About the Author
Share this article: