linermates.blogg.se - Eidl loan increase

They have paid dividends or personal expenses for their owners.They have spent loan monies on prohibited expenses.They did not have the degree of Substantial Injury as the law requires when they applied and received the loans.In summary, a very high percentage of EIDL borrowers are in violation of civil and criminal statutes and loan provisions because of one or more of the following: Pay any penalty resulting from noncompliance with a law, regulation or order of a Federal, state, regional, or local agency You must document why this was or was not imposed.ĩ. When processing during the injury period, it is generally appropriate for you to negotiate with Federal creditors to defer payments (or take similar action) until the end of the injury period.However, if the applicant has other resources or recoveries, we should generally allow (and perhaps require) those resources to be applied first to ineligible needs, such as the payment of direct Federal debt. If the Federal creditor cannot or will not cooperate, the likely result will be a decline of the EIDL request. If a direct Federal debt is delinquent because of the disaster, we should make arrangements with that Federal creditor to have payments deferred or a similar action taken to bring the delinquency current prior to approval of an EIDL.

If a direct Federal debt is delinquent, your recommendation must be based on independent documentation from the appropriate Federal agency explaining how the delinquency will be cured.

Payment of any part of a direct Federal debt, (including SBA loans) except IRS obligations. Federal Deposit Insurance Corporation (FDIC) is not considered a Federal agency for this purpose Ĩ. 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. Repair or replacement of physical damages ħ. Expansion of facilities or acquisition of fixed assets ĥ. Repayment of stockholder/principal loans, except when the funds were injected on an interim basis as a result of the disaster and non-repayment would cause undue hardship to the stockholder/principal Ĥ. Disbursements to owners, partners, officers, directors, or stockholders, except when directly related to performance of services for the benefit of the applicant ģ.

Repaying obligations other than those listed above that cannot be met due to revenue losses.įurther, SBA presentations and a Standard Operating Procedure document from 2018 provide the following to enumerate the ineligible uses of EIDL loan money:Ģ.Meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains and.Providing paid sick leave to employees unable to work due to the direct effect of COVID-19.Payroll costs during business disruptions or substantial slowdowns.

While a great many borrowers consider it to be a duty or an entitlement to borrow under the EIDL program, the standard of need appears to be much higher than the treacherous “necessity” standard that applies for PPP loans (as discussed in my article dated May 4, 2020) and while an EIDL loan is outstanding there can be no dividends or personal expenses paid by the business entity for its owners, as discussed below.įurther, EIDL loan proceeds cannot be spent on any expenses that were already funded and paid for by PPP loan proceeds or medical practice relief loan payments, and must be spent only on the following: