Home COVID-19: Resources and Discussions for Small Businesses
Announcement:: Please see our new COVID-19 category where small businesses can engage with other business owners and experts to share best practices, information and other resources that will help us all get through this crisis.

Questions about the Economic Injury Disaster Loan (EIDL) Program

sherryp37sherryp37 Broker AssociateMember

Any input what can be paid and what cannot be paid from the proceeds of an EIDL loan. I am a sole proprietor , independent contractor and drive for Lyft. I am 1099'd, work from home but must pay office dues that I am affiliated with. I know car payments and repairs, car insurance, related real estate and other vehicle issues. Told by SBA that I couldn't buy a new car even if it will cost a lot to keep it in condition to use for work. Doesn't make sense...a payment is a payment and cash out for repairs is still cash out. I have been living on my credit cards and maxed out. I have had conflicting information as to whether I can pay even of a portion of residential rent. credit cards etc. I am not behind thanks to maxed credit cards but would be behind otherwise. Does anyone have information to guide me or direct me to an information source. Thank you for your time

Tagged:

Comments

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    Generally, the EIDL can't be used to fund any kind of business "expansion", which is probably why you were told you could not buy a new car with it. It can be used to pay existing debt obligations, so long as you don't pay off the whole balance. It's essentially supposed to help you cover your fixed bills, accounts payable, etc. It's unclear to me about rent since your home isn't necessarily tied to your business as a Lyft driver; I'd probably seek to clarify with SBA on that point.

  • solutionssolutions President Member

    Last year I though I was applying for a PPP loan and did not realize it was an EIDL loan. I used it as if it was a PPP loan and now find that I have to pay it all back with interest and there is no forgiving of the loan. I would have returned the money it hit bank if I realized it was a loan. I don't have the money to pay it back. This may put me out of business. Is there any grant money available or any forgiveness of the debt?

  • Brian_SBMBrian_SBM Vice President, Entrepreneurship Administrator admin

    @solutions I'm sorry you were confused by the two programs. What state are you located in, so we can recommend some potential grant programs to help? Also, the EIDL loan should be repayable at a 3.75% interest rate over 30 years. For a $19,000 loan, hopefully that keeps the monthly payments relatively affordable, though I do empathize that it's still a burden. We continue to advocate at the federal level for forgiveness of EIDL loans, but not sure there is much appetite for it at this point.

Sign In or Register to comment.