Greg Tidmore
It doesn’t take much to default on your EIDL—just one missed step can land you there. The SBA spells it out in the fine print: if you break any of the terms in your Loan Authorization and Agreement, you're in default.
We've pulled some of the most common violations from that agreement and broken them down below. For each one, you'll see the original quote (in quotes) followed by a simple yes-or-no question to help you figure out if you've slipped up.
Did I Make All My Payments On Time?
"Borrower must pay principal and interest payments of $731.00 every month beginning Twelve (12) months from the date of the Note..."
"All remaining principal and accrued interest is due and payable Thirty (30) years from the date of the Note."
Did you make every required monthly payment—on time and to the place the SBA instructed?
Did I Sell or Move My Collateral?
"Borrower will not sell or transfer any collateral (except normal inventory turnover) without the prior written consent of SBA."
Did you move, sell, or transfer anything listed as collateral without written SBA approval?
Did I Use the Loan for the Right Things?
"Borrower will use all the proceeds... solely as working capital to alleviate economic injury caused by disaster occurring in the month of January 31, 2020..."
Did you use the funds only to cover working capital losses from COVID-19 disruptions—not for expansion, investments, or personal use?
Did I Keep Every Receipt?
"Borrower will obtain and itemize receipts... and retain these receipts for 3 years..."
Do you have paid receipts or canceled checks for every dollar you spent from your EIDL?
Did I Relocate My Business?
"Borrower will not... relocate without the prior written permission of SBA..."
Did you move your business—even partially—without first getting SBA permission?
Did I Buy Only American-Made Products?
"Borrower will, to the extent feasible, purchase only American-made equipment and products..."
Did you buy foreign-made items with your EIDL funds?
Did I Receive Money From Other Sources?
"Eligibility... is limited to disaster losses that are not compensated by other sources..."
Did you get reimbursed through insurance, a grant, or any other recovery source for the same losses the EIDL was meant to cover?
Did I Buy and Maintain Hazard Insurance?
"Within 12 months from the date of this Loan Authorization and Agreement the Borrower will provide proof of an active and in effect hazard insurance policy... and will maintain such coverage throughout the entire term of this Loan."
Did you get the required insurance within 12 months—and send proof to the SBA? Have you kept it active?
Did I Keep My Books in Order?
"Borrower will maintain current and proper books of account..."
Have you kept up with your books, taxes, insurance, and financial records in a way the SBA would approve?
Didn’t See Any Problems?
That’s a good start—but these are just the most common triggers for default.
Even a small misstep could technically put you in default. If you think you may be in trouble—or need help closing your business while limiting your liability—we can help.
Contact EIDLexit today for a free consultation. Let’s talk through your situation and your options.
