Q: “Is there a deadline to spend my EIDL and is there a defined timeframe in which costs must be incurred and what are the guidelines around reimbursement, e.g., does this timeframe pre-date when funds were received and does it allow for reimbursement of any previous expenses paid?”
June 16, 2020
Unlike the terms of the Paycheck Protection Program and its rules around loan forgiveness, there is no specified deadline for when Economic Injury Disaster Loan (EIDL) funds must be spent. As a general note, the EIDL loan term can be up to 30 years and carries an interest rate of 3.75%. EIDL loan funds can be used to repay fixed debts or other bills that cannot otherwise be paid or repaid because of revenue losses due to the pandemic. While the second part of the question above regarding reimbursement of previous expenses paid is not directly addressed by the SBA, the conservative approach would be to not use the funds for reimbursing the business for expenses paid prior to receiving the loan because those expenses would likely be considered as expenses that could in fact be paid despite revenue losses.
Each business’ fact patterns and situations are of course unique and the advice provided here is general in nature. To the extent readers have specific questions concerns about their use of EIDL funds or what expenses are covered uses, please reach out to us for additional guidance.