EIDL Loan Basics

I’m starting to hear reports of a few clients receiving EIDL loan funds from the SBA, and we are receiving questions on this program, so here are the basics:

The EIDL loan proceeds are intended to pay for your normal operating costs of doing business to keep you open & in business when you otherwise would not be able to pay those costs due to COVID-19.

Loan amounts vary (I don’t know how they come up with the amount they offer). Interest is 3.75%, payments are deferred for 12 months, and terms vary (I’m mostly hearing 15 – 30 year terms). The EIDL also provides an advance of $1,000 per employee up to $10,000 that is the forgivable portion of the loan.

It is appropriate to use these funds for operating costs such as payroll, rent, supplies, utilities, insurance, technology, and all of the other normal operating costs of running a business.  This only applies to the costs of the business that received the loan – so if you have multiple businesses, you cannot use one EIDL loan to cover costs in the other business, you would need an EIDL loan for each business.

If you have both an EIDL and PPP loan, you can only use the EIDL to cover PPP qualifying expenses after the PPP funds have been exhausted, and any EIDL Advance will decrease the amount of the PPP that is forgiven.

The EIDL loan funds can NOT be used for refinancing other debts, paying off other debts, making loan payments on other federal debts, repairing physical damages, paying IRS tax penalties, paying out dividends/draws to owners, or business expansion into new projects or new lines of business.

If you have further detailed questions about how your specific loan works or what can & cannot be covered with the proceeds, please contact the SBA loan officer working with you.  They are your best source of detailed information for your specific loan.


B. Siobhan Q. Murphy
Thrive Business Group