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How to Use Funds From Your SBA EIDL Loan

Sign in a window that states, “Yes, We’re Open” with customers blurred in the background.The U.S. Small Business Administration (SBA) COVID-19 Economic Injury Disaster Loan (EIDL) program is designed to promote economic recovery and minimize harmful impacts on small businesses. Find out how the SBA EIDL loan works and how you can use your funds to recover from the COVID-19 pandemic.

What Is an SBA EIDL Loan?

The EIDL program for the COVID-19 pandemic stopped taking new applications as of January 1, 2022. If you have already applied, however, you may be confused about how to use your funds and how to move forward with the program.

The goal of this program is to help small businesses, like yours, recover from the economic impacts of the past few years. Here are some important features to remember about the EIDL program:

  • The size of the loan affects the requirements
  • Increases to your loan size may be available
  • Unlike the Paycheck Protection Program, this SBA loan program isn’t forgivable
  • The loan term is 30 years, with a two-year payment deferment.
  • Interest rates are set at 3.75% fixed for businesses and 2.75% fixed for private nonprofit organizations
  • The maximum amount is up to $2 million

The application date has already passed for applying for a new EIDL loan. If you haven’t applied and need financial assistance, ask a professional about the SBA 7(a) and SBA 504 loan programs.

How Can I Use My SBA EIDL Loan?

This low-interest, long-term loan comes with a fixed interest rate. It’s designed to cover working capital to help your business continue to move forward. Here are some examples of approved uses of the proceeds:

  • Rent/mortgage
  • Payroll
  • Business debt
  • Other regular operating expenses or ordinary business expenses

There are also prohibited uses of SBA EIDL proceeds. This program isn’t designed to cover the following expenses:

  • Dividends or bonuses
  • Expansion of facilities or major asset purchase
  • Repayment of stockholder
  • Refinancing debt
  • Relocation
  • Payment of non-compliance penalties
  • Purchase of Real Estate

All of the examples of approved and prohibited uses are subject to change. Work with a management consultancy expert to determine whether a proposed use of funds is approved.

How Long Does It Take SBA to Approve EIDL Loans?

Most applications are decided on within 21 days. If you’ve waited longer than this, then there may have been an issue with your application. Reach out to a professional to assist you in navigating the process and determine whether your EIDL loan is approved or denied.

After your application is approved, you may see the funds within five to 10 business days. These funds are electronically deposited into your bank account. The process for loans that don’t include a lien on real estate or loans greater than $500,000 can vary.

Where Can I Turn for SBA Loan Assistance?

Whether you’re requesting a larger SBA EIDL loan or need help finding out how to use your proceeds, it’s time to work with a skilled business-to-government professional. Contact us at Rafael Marrero & Company to learn more about our SBA loan assistance services and other ways to grow your business.

Dr. Rafael Marrero

A nationally recognized expert in federal contracting, small business entrepreneurship, vendor, and project/program management. A graduate of the prestigious Stanford and Cornell Universities, Dr. Rafael Marrero is a former Fortune 500 procurement executive, two-time Inc. 500 honoree, network news commentator, and Amazon best-selling author.

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