EIDL Loan Funded

[Puppetmaster]

Today my business received $6*,000.00 in EIDL loan funds to go with the $3,000 grant received about a month ago.  Other than some delay, the application, approval and funding process went extremely smoothly for me.  I have opened a separate business checking account to hold these funds for clear tracking of any/all payments made from them.

[sccredit]

Curious - how long between signing docs and receiving funds?

[AllZero]

Congratulations on your approval!

[GApeachy]

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@Puppetmaster wrote:

Today my business received $6*,000.00 in EIDL loan funds to go with the $3,000 grant received about a month ago.  Other than some delay, the application, approval and funding process went extremely smoothly for me.  I have opened a separate business checking account to hold these funds for clear tracking of any/all payments made from them.

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Congrats Puppetmaster.  Are you expecting part of the loan to be forgiven?  .....thus the separate business acct

[jaxstraw]

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@GApeachy wrote:

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@Puppetmaster wrote:

Today my business received $6*,000.00 in EIDL loan funds to go with the $3,000 grant received about a month ago.  Other than some delay, the application, approval and funding process went extremely smoothly for me.  I have opened a separate business checking account to hold these funds for clear tracking of any/all payments made from them.

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Congrats Puppetmaster.  Are you expecting part of the loan to be forgiven?  .....thus the separate business acct

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The EIDL is not a forgivable loan.

Putting it in a separate account is a tactic to make tracking how the funds are used in case of an SBA audit since they have restrictions on how it is used.

As a side note though to the forgiveness question.

Although I haven't been able to verify this i read somewhere the SBA eventually forgave all the EIDL loans issued during Hurricane Katrina due to the incredibly high default rate.

In normal times about 1 in 6 SBA loan defaults......these disaster loans are issued with the simplest of applications and very little verification of creditworthiness.

The default rate is going to be much higher than 1 in 6.

[Anonymous]

As low as the payments are I can't imagine many of the small ones will be defaulted on.  My EIDL load was for $19,500 and the payments on it will only be like $96 a month.  

On a seperate note is there some seperate discussion on what EIDL funds can be used for.  I am taking the next couple of months off and reevaluating.  If it looks like a vaccine will be available early 2021 I might take the rest of the year off, which I will fund through separate savings.  Most of my business expenses are travel related and I will need the funds for that when I restart.  I'm just curious on what I can and cannot do with the money between now and then.  Can I purchase gift cards or points at a discount and hold them as long as I use them only for business travel?  Can I invest the money in investment grade securities or is a savings account the best I can do with it?  I'm pretty sure I can use it to pay myself, although I only plan on doing that in an emergency.

[jaxstraw]

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@Anonymous wrote:

As low as the payments are I can't imagine many of the small ones will be defaulted on.  My EIDL load was for $19,500 and the payments on it will only be like $96 a month.  

On a seperate note is there some seperate discussion on what EIDL funds can be used for.  I am taking the next couple of months off and reevaluating.  If it looks like a vaccine will be available early 2021 I might take the rest of the year off, which I will fund through separate savings.  Most of my business expenses are travel related and I will need the funds for that when I restart.  I'm just curious on what I can and cannot do with the money between now and then.  Can I purchase gift cards or points at a discount and hold them as long as I use them only for business travel?  Can I invest the money in investment grade securities or is a savings account the best I can do with it?  I'm pretty sure I can use it to pay myself, although I only plan on doing that in an emergency.

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I'm not sure if you read other forums that relate to these EIDL loans such as r

Reddit or FB but the amount of successful applicants who have sub 600 credit scores and little to no understanding of how a debt instrument is even structured is astonishing. So many applicants signed up on that short form just to receive the advance of 'free money' and then when actually offered the loan it had to be explained to them they filled out a loan app.....not just an app for a one time grant.

It was absurd how often this happened.

The default rate for those lower loans will likely be higher than the larger numbers.

There was a thread where several people who a like those on this forum ( knowledgeable about credit) chimed in and the consensus is this program will probably see a better than 50% default rate.

The SBA will be overwhelmed just tracking those....there are less than 4000 total employees in the SBA and only a few hundred in audits. They just added approximately 3-4 million new loans to all the existing and future loans they are responsible for.

The CARES ACT never considered the oversight needed for this because it was so rushed.

[Anonymous]

I don't use reddit because it's an annoying and hard to navigate software to me, but from the number of declines I've seen in my limited exposure I didn't expect anyone with sub600 scores got the loans.

[AzCreditGuy]

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@jaxstraw wrote:

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@Anonymous wrote:

As low as the payments are I can't imagine many of the small ones will be defaulted on.  My EIDL load was for $19,500 and the payments on it will only be like $96 a month.  

On a seperate note is there some seperate discussion on what EIDL funds can be used for.  I am taking the next couple of months off and reevaluating.  If it looks like a vaccine will be available early 2021 I might take the rest of the year off, which I will fund through separate savings.  Most of my business expenses are travel related and I will need the funds for that when I restart.  I'm just curious on what I can and cannot do with the money between now and then.  Can I purchase gift cards or points at a discount and hold them as long as I use them only for business travel?  Can I invest the money in investment grade securities or is a savings account the best I can do with it?  I'm pretty sure I can use it to pay myself, although I only plan on doing that in an emergency.

---

I'm not sure if you read other forums that relate to these EIDL loans such as r

Reddit or FB but the amount of successful applicants who have sub 600 credit scores and little to no understanding of how a debt instrument is even structured is astonishing. So many applicants signed up on that short form just to receive the advance of 'free money' and then when actually offered the loan it had to be explained to them they filled out a loan app.....not just an app for a one time grant.

It was absurd how often this happened.

The default rate for those lower loans will likely be higher than the larger numbers.

There was a thread where several people who a like those on this forum ( knowledgeable about credit) chimed in and the consensus is this program will probably see a better than 50% default rate.

The SBA will be overwhelmed just tracking those....there are less than 4000 total employees in the SBA and only a few hundred in audits. They just added approximately 3-4 million new loans to all the existing and future loans they are responsible for.

The CARES ACT never considered the oversight needed for this because it was so rushed.

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The whole program has been a scam when it came to the grant money, some received the full $10k and others like myself received $1k due to the ever changing terms. I just got approved for a $16,500 over the weekend The EIDL is not a forgivable loan as others have stated and it has restrictions on how it can be used. Im going to have my legal shield look at the loan docs to comply with the SBA in case of future audit. 

I have an S-Corp which adds more to complexity. 

Interesting what you stated above about defaults, I mean you really have to think and plan when getting these types of loans...