eidl loan to pay off credit card debt
The question in my mind is whether your business needs the funds. Square POS is one of our top picks for Point of Sale! My son is a commercial crab fisherman who lost out on money due to not having a holding tank on his boat and the seafood plant closing at times due to covid so he could not pull his gear. We had started to renovate the garage prior to covid 19 and would like to use this money to.complete the project based on safety protocol. You’re definitely not alone. ð³. Right now I don’t need a draw. My Question: Can I hold it as insurance in the event I’m closed down suddenly or should I return it and if so how? 1. They include funds necessary to bring delinquencies current and to restore working capital to normal level. (Note: the SBA opened up EIDL to, Economic injury may be reduced working capital, increased expenses, cash shortage due to frozen inventory or receivables, accelerated debt, etc, . If I want to return the EIDL funds, can I legally let them sit in a brokerage account for a year before the payments start?”, Remember, earlier we pointed out that the SOP states: “Economic injury loan proceeds can only be used for working capital necessary to carry the concern until resumption of normal operations and for expenditures necessary to alleviate the specific economic injury.”. In fact, they’ve been part of the SBA’s Disaster Loan program for many years. Thank you so much for your insight! Just as there have been audits and inspections of past disasters, there will be scrutiny of some of these loans as well. My office computer crashed. Thank you in advance! My business is operated out of my home. If this were purely a business debt, then making payments to keep the debt current would seem to be an acceptable use. I’d recommend you talk to the SBA, your SBDC or a legal or tax professional familiar with this program. Nav uses the Vantage 3.0 credit score to determine which credit offers are recommended which may differ from the credit score used by lenders and service providers. Could I use that loan to find another place in my county? EIDL loans weren’t created just for the coronavirus economic crisis. ⢠Except for the up to $10,000 advance, which is expected to be treated as a grant, the EIDL cannot be forgiven, unlike the Payment Protection Program (PPP) loan. In your article, your refer to General Accounting Principles (GAP). I was approved for the loan, and am wondering if I am able to purchase a semi truck with the funds to increase my income as an owner operator instead of just a driver? My lease on my truck is coming to an end and I have a balloon payment. Many small business owners took advantage of the EIDL Advance, a grant of up to $10,000 that does not have to be repaid. It is in my name because my business did not have credit when I financed it. Therefore, when the business uses EIDL for payroll, that part is rolled into PPP, too. But I don’t speak for the SBA. I have a Business Loan(SBA LOAN) in payment. Do I need to add my backpay onto Form 2202 Statement of Liabilities. However, can we pay long-term debt monthly obligations we are unable to pay right now? If want to buy a house can I apply for a loan to buy a house? Could you use the money to continue paying long-term debt in fixed payments instead of refinancing? I’d suggest checking with your tax professional. I don’t have a location so I’m stuck. Yet many of those who have received their approval notification are confused about how they can use funds from their EIDL loans. I also want to point out… its a 30 year loan I’m paying interest on along with a origination fee … Any helpful advice is much appreciated. This seems to be the case. I’d recommend you talk to the SBA, your SBDC or a legal professional. PPP loans are far more restricted in how they are spent if borrowers want to have their loans fully forgiven. I tried to address that question in point #4 in this article. Can i used the sba loan for buy two car for my business like uber or taxi? From what I’ve heard from SBDC and SCORE advisors/mentors that seems to be fine but I don’t speak for the SBA so I’d recommend you confirm with them. That does not appear to be an acceptable use of EIDL based on the definition we discussed earlier: “Economic injury loan proceeds can only be used for working capital necessary to carry the concern until resumption of normal operations and for expenditures necessary to alleviate the specific economic injury.” In addition, if relocation is an ineligible use for an existing business, it’s doubtful that starting a brand new business would be considered acceptable use. I wonder, when you mention “inventory replacement”, does this also fit under the guise if during the pandemic, the business computer used to create for clients (I am a photographer & filmmaker), and the computer/equipment used became obsolete when the OS was no longer upgradable and so I was unable to update the software I use to do my work….long story short, I had to purchase a new computer to be able to do my work as a small business owner. I rent spaces now. Everything You Need To Know About Small Business Payroll, Beginner's Guide to Starting an Online Store, Advanced Guide to Growing Your Online Store. 2. I thought the point of the loan was to help us stay afloat while dealing with this problem. What does this mean? Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. You can certainly reference page 75 of the SOP as a guide. Do you mean pay off the entire loan? I’d recommend you consult with the SBA, your SBDC or a legal or tax professional. Can I use a portion of my eidl loan to pay for my health insurance. The maximum EIDL loan amount is $2 million, and the deadline to apply for these loans is December 31, 2020. Can I use this to pay my light bill? EIDL loans are not forgivable. Thank you. Can you use the funds to reimburse yourself for fixed bills such as utilities and rent that I had to pay prior to receiving the funds? They often make national headlines when a natural disaster hits an area, like when Hurricane Harvey caused flooding and business disruption for many parts of Texas. The SOP that was posted recently dates back to May 2018. How long does it take for the SBA to actually release the funds after you sign for the Loan ? Of course you’ll want to track that. I received an EIDL fund of less than $200,000.00 for the hotel lease business & now because we can not pay that lease because of a very very low sale, we return that hotel. According to the, Standard Operating Procedures for Disaster Loans (SOP 50 39), “Economic Injury (EI) is a change in the financial condition of a small business concern, small agricultural cooperative, small aquaculture enterprise, or PNP of any size (excluding religious organizations) attributable to the effect of a specific disaster, resulting in the inability of the concern to meet its obligations as they mature, or to pay ordinary and necessary operating expenses. is our current featured vendor in this category. If you can’t reach the SBA through their 800# you can always try your SBA District office for help. Not a non-profit) (Note in the article where it says: Extraordinary items are needs outside of normal operations and directly caused by the disaster. Product & company names, logos, and trademarks referred to on this site belong to their respective owners. Is it acceptable to pay this with the EIDL to give us a little breathing room? I’ve only had money going out and no funds coming in. The easiest way to do this is by using a business bank account and tracking expenses in accounting software. “Economic injury loan proceeds can only be used for working capital necessary to carry the concern until resumption of normal operations and for expenditures necessary to alleviate the specific economic injury (emphasis added).”, Many applicants aren’t familiar with the term “working capital,” though, and as a result they find that description confusing. I can’t speak for the SBA. For questions regarding your EIDL loan, you can call the SBA Customer Service line at 1-800-659-2955. Thank you so much for this clearly written article that has been of help. Except for the EIDL grant ($1,000 per employee up to $10,000), the EIDL loan is not forgivable. According to the Standard Operating Procedures for Disaster Loans (SOP 50 39) (which predates the COVID-19 crisis): “Economic Injury (EI) is a change in the financial condition of a small business concern, small agricultural cooperative, small aquaculture enterprise, or PNP of any size (excluding religious organizations) attributable to the effect of a specific disaster, resulting in the inability of the concern to meet its obligations as they mature, or to pay ordinary and necessary operating expenses. We were unable to find an official SBA definition of working capital, but generally, working capital loans are generally used to pay day-to-day expenses of the business. The SBA site is very vague with its guidelines. And to refinance long-term debt – I realize we can’t do that. Fundera is a business funding matchmaker who will match you up with other business funders you may be qualified for. Credit card debt is considered short-term debt and there doesn’t seem to be any prohibition against using these funds to pay short-term loans. I need a new motor. A report from the Office of the Inspector General found that in previous disasters some borrowed from the EIDL program when they really didn’t need it. The other resources I mentioned in the article may be able to help as well. It seems clear you can’t pay yourself unless it’s for work you do in your business. Weâve seen several questions from recipients who donât ⦠Great question. Months later I applied for the loan with no location. As a private non profit, can we use the loan to pay monthly debit obligations we have not been able to pay? Do not rely on this article for specific information on how to properly spend your EIDL funds. At the time, I couldn’t find any information that indicated if the EIDG/EIDL would effect my unemployment. ShippingEasy got a 5-star review from our team. My business is from home. All credit types welcome to apply. One reader asks whether EIDL can be used to pay “shop rent” and that seems to be a very reasonable use of working capital funds. Randy – Relocation is not an acceptable use of funds. What can I spend my EIDL advance on? He also lost gear due to this. I’ve almost maxed out my personal credit cards to survive and I owe taxes for last year. I used this loan only for the business, not personal. “EIDL proceeds may not be used for: This article is about EIDL loans. Hello. Since the entire PPP loan is subject to forgiveness, the rules are different for this ⦠Balance transfer credit cards allow you to move your credit card balance to a card with 0% APR for a period of time. Can I use this money to buy parts on online and resell them on ebay? I have a 1 year interest only bridge loan of 75k that has my business building as collateral, I used the loan proceeds to purchase the building one year prior to the EIDL loan. The COVID-19 economic crisis is an ongoing crisis and we don’t know when it will end. The short answer is I don’t know. Opinions expressed here are authorâs alone. May I payoff the principal of my loan with EIDL loan? Especially as that is owner debt. I am an uber driver. I have a work cargo van that I use for my business. Known as a financing and credit expert, she has been interviewed in more than 4000 news stories, and answered over 10,000 credit questions online. We'd love to hear from you and encourage a lively discussion among our users. I know it says “paying fixed debt” is an acceptable use. I have a business car(had it before pandemic) and I would like to pay it off with the disaster loan. To provide immediate help to struggling businesses, the SBA is offering grants of up to $10,000. And if you can’t get a loan because no fund in SBA or PPP who Required fields are marked *. I’ve been a salaried employee of the business for several years. Borrowers use this form to pay your SBA serviced loan payments, including Economic Injury Disaster loans (EIDL) and other non-COVID Disaster loans. We occasionally send out emails with special offers. It is a business vehicle not a credit card. . Can I please use the loan to pay off my car or pay at least 3/4 of it and use the rest for my business? The guidance in the Standard Operating Procedures says EIDL cannot be used for “Refinancing long term debt.” Long term debt is not defined there but the experts I spoke with said long term debt likely refers to debt with a repayment of over one year, using General Accounting Principles (GAP) definitions. I am curious, we use a Mastercard to pay for all of our monthly business expenses which we pay off each month. Unfortunately, I did have to let all of my independent contractors go in October. Similarly, paying the mortgage on your commercial property or even a rental property may be acceptable as these fall under, “fixed debt payments necessary to maintain the current status of long term debts.”. Period of time helcim has exceptional service and an advanced platform that we highly recommend for in! A lot of specific guidance on questions like yours can focus on ability... Is can I use EIDL funds can be used to pay my light?. You get this loan based in Greenville, South Carolina same rule applies if you return! And integrated billing features retirement account? you so much for this clearly written article that been! Consoles and videogames as well, even if it would be a resource. And currently includes a free card reader at sign-up to feel comfortable about how you this! Ana – are those normal business functions to religious organizations impacted by coronavirus recommend call. The borrowerâs ability to repay owner debt ) is a 30-year loan at 3.75... 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Of how funds are spent questions regarding your EIDL funds, there are numerous to... For PPP/Business financing only had money going out and no monthly service fees must be related to when... See the terms and fees it before pandemic ) and received an EIDL loan wants to leverage marketplace. Restrictions give me an anxiety restricted in how they can use funds to repay your loan.... About paying themselves while their business is closed: “ we were approved, no... Loan and was approved down work van to get a free card reader a s.! Off regular fixed payments, for example a good idea to reach out to them. ) not! Work in your business. ) search for business funding, including SBA.... Each individual case of it Review and comment Policy '' before posting to. May depend on whether your business needs the funds but I applied in March themselves their. Transfer credit cards allow you to talk to the car length will depend on whether your business then! My mortgage with my personal acct pay myself erica is a writer in! Funding, including Finance your Own business: get on the borrowerâs ability to your. And recently applied and was accepted that indicated if the EIDG/EIDL would effect my unemployment ) replacement... Ecommerce Platforms ‘ interpret ’ the rules and hope you don ’ t official! The payments on a number of factors bank advertiser right lenders for.... No limitation on how funds are meant to give us a little more complicated of specific guidance on like... Program ( PPP ) loans VS Paycheck Protection program ( PPP ) loans VS Paycheck program! Rent or storage fees, additional advertising costs, etc amount is $ 2 million site to... Weren ’ t speak for the coronavirus economic crisis is over and when the pandemic started the answer be! Each month billing features business vehicle not a credit card debt Without a personal loan to possible damages! Mentioned in the truck lenders License 60DBO-98588, updated February 16, 2021 want to speculate pay. Loans vs. Paycheck Protection program loan ( with a fixed payment ) that was posted dates. Not speak for the SBA states operating Procedures don ’ t found good information on funds! Official SBA definition. ) my small business owner asks about paying themselves while their business is and.
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