What not to do with your EIDL loan
So you got your EIDL and PPP loans!
Now you have to be sure to use the funds according to the rules or risk having to pay them back under difficult and costly conditions.
According to the Small Business Administration, you CANNOT use these loans for any of the following items:
Dividends and bonuses;
Disbursements to owners, unless for performance of services;
Repayment of stockholder/principal loans (with exceptions);
Expansion of facilities or acquisition of fixed assets;
Repair or replacement of physical damages;
Refinancing long term debt;
Paying down (including regular installment payments) or paying off loans provided, or owned by another Federal agency (including SBA) or a Small Business Investment Company licensed under the Small Business Investment Act;
Payment of any part of a direct Federal debt, (including SBA loans) except IRS obligations;
Payment for any penalty resulting from noncompliance with a law, regulation or order of a Federal, state, regional, or local agency;
Contractor malfeasance; and
Many business owners use the money for those items that they deem can help them stay open, and check the list later, If you have already used the funds for any of these items, talk to your accountant, all is not lost. You may be able to remedy the situation before it gets too big to handle.
Remember to review your UCC liens so you can still qualify for loans or lines of credit in the future.