Using My EIDL Funding

Did you manage to get a loan from the SBA EIDL program?

If you did, you were able to secure a low interest loan that can be used to immediately cover day-to-day expenses your business incurs!

However, it is important to know what the restrictions regarding the loan are before spending the money. 

Many small business owners are not aware of the restrictions in place on the use of their EIDL funds and want to avoid violating any restrictions that are put in place.

What Am I allowed to use the EIDL loan on?

Fortunately, the EIDL program is the least restrictive of the relief programs, allowing the loan to be used as working capital.

Working Capital is defined as the capital of a business which is used in its day-to-day trading operations, calculated as the current assets minus the current liabilities.

Therefore, you have several options of how you would like to spend the money granted from your EDIL loan. 

The following are examples of day-to-day expenses which you are able to cover using your EIDL loan: 


  • Web hosting
  • Inventory
  • Supplies 
  • Accounts payable
  • Rent and utilities
  • Merchant fees
  • Bookkeeping
  • Accounting services


These are general examples of what you may use your EIDL loan on.

You can also use it to cover monthly financial obligations and expenses such as loan and credit card payments.

Please note that you cannot pay the entirety of the balance of these debts, as that would be considered refinancing.

Refinancing is NOT a permissible use of EIDL funds, so be sure to avoid doing this.


Are there restrictions on what I can spend my EIDL advance on?

Because the EIDL advance is considered a grant, this can be used however you see best for your business without any restriction. 

You can apply for the EIDL grant at the same time you apply for the EIDL loan.

The amount of money you will receive for the EIDL depends on how many employees you have.

The grant is based on $1,000 per employee and maxes out at $10,000.


What are the restrictions of use on my EIDL funds?

Although this is the most flexible of the relief programs, there are still some important restrictions to keep in mind. 

Upon signing the loan agreement, you agreed that you would not use EIDL funds for any of the following: 


  • Dividends 
  • Bonuses
  • Disbursements to owners (draws and distributions), except when directly related to performance of services
  • Repayment of stockholder or principal loans
  • Expansion of facilities or acquisition of fixed assets 
  • Repair of physical damages
  • Refinancing long term debt (e.g. paying off previous large credit card debt)
  • Paying down federal loans (from the SBA or other federal agencies)
  • Relocation


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What If I Have A PPP Loan?

The PPP and EIDL are designed to be used together.

Therefore, there are some conditions regarding what the loans can be used on if you have received both.

Specifically, the EIDL cannot be used to cover the same expenses that are covered by the PPP while within the 8-24 week forgiveness period.

Need a reminder on what you can use your PPP funds for? 

  • Payroll expenses 
  • Rent or lease payments
  • Utilities
  • The interest portion of mortgage payments

You can still use your EIDL funds on the above expenses if you do not wish to claim them under the PPP.

For example, if you use the entire amount of PPP on payroll and rent, you can still use your EIDL funds on utilities expenses.

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How do I track the use of my EIDL funds?

This is a question asked by many small business owners after receiving there EIDL funds.

The most simple way to do this is to keep these funds in a separate bank account all together.

Therefore, if you are ever contacted by the SBA, you can provide bank statements showing the entire transaction history of the EIDL funds. 



There is no requirement for which business account you can spend the funds from. All you need to do is track all  eligible expenses covered by the EIDL. 

It's up to you to self report what business activity the EIDL funds were used for if prompted by the SBA.

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