§123.303 How can my business spend my economic injury disaster loan?
13 C.F.R. § 123.303
Found your Code of Federal Regulations (C.F.R.) I know you were looking for, I have a few notes at the bottom of this post for clarification.
"(a) You can only use the loan proceeds for working capital necessary to carry your concern until resumption of normal operations and for expenditures necessary to alleviate the specific economic injury, but not to exceed that which the business could have provided had the injury not occurred.
(b) Loan proceeds MAY NOT BE USED TO:
(1) Refinance indebtedness which you incurred prior to the disaster event;
(2) Make payments on loans owned by another federal agency (including SBA) or a Small Business Investment Company licensed under the Small Business Investment Act;
(3) Pay, directly or indirectly, any obligations resulting from a federal, state or local tax penalty as a result of negligence or fraud, or any non-tax criminal fine, civil fine, or penalty for non-compliance with a law, regulation, or order of a federal, state, regional, or local agency or similar matter;
(4) Repair physical damage; or
(5) Pay dividends or other disbursements to owners, partners, officers or stockholders, except for reasonable remuneration directly related to their performance of services for the business."
NOTES: This should finalize the question many have repeated trying to get someone to agree with their view and interpretation of what you can spend your EIDL money on. There is a reference to what the IRS allows but it does not override this section in the federal regulations.
Research based learning
"Providing resource supported answers."
I was not told why my SBA EIDL was declined. Does the SBA send a reason code or declined reason by letter?
Borrower may not use an oral statement of SBA to contradict or alter the written terms of this Note.
Reconsideration of Declined EIDL add Personal Financial Statement Disaster Programs SBA Form 413D (03-18) to your document list.
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