Theseus wrote: ↑
Sat Mar 28, 2020 10:09 am
My goal here is the exchange experiences and help others navigate the complex process to make it most useful in each situation. Basically crowd source the knowledge.
Theseus, thanks again for starting this thread.
I put these questions to the accountant but am waiting to hear back. I got an EIDL loan. I was somewhat surprised to read the fine print giving the SBA the right to audit, specifying insurance requirements on collateral, and also the disallowed uses. Of course, I plan to comply with all, but some "guidance" seems a little murky to me.
Please note that I'm specifically speaking about EIDL, NOT PPP.
I think other posters might be confused by my questions.
I was curious about two prohibited uses in particular:
cannot be used for repayment of long-term debt:
I was going to pay off a business line of credit, which is 8%, with some of the proceeds. In my non-accountant brain, I consider an LOC short-term debt; it's not a mortgage, nor does it have a repayment schedule. Seem reasonable?
cannot be used for owner compensation other than "normal" wages:
what implications for a single person LLC/ sole prop? I probably won't need to use the loan for this purpose, but a normal biweekly draw, if within the limits of prior years' income, might be allowed?
Mostly I plan to use the proceeds as needed for ongoing expenses and an equipment lease payment. Like the PPP, I opened a new business accounts as a container for the EIDL loan proceeds, and will carefully document every transaction.