# SBA EIDL Loan Recipients: What are you spending the money on?



## _Tron_ (Feb 9, 2020)

From reports on these pages, drivers are starting to receive funds from the Small Business Association Emergency Injury Disaster Loan program (SBA:EIDL). After reviewing the guidelines for how the money can be spent, it seems that for Uber/Lyft drivers the menu of allowable expenditures is rather short. As best I understand it the EIDL funds can only be spent on:

1) Your business. Not personal expenses.
2) As operating capital. So all the expenses we would normally incur driving.
3) On payroll. But you must be set up to issue a W-2 to yourself to qualify.
4) Car loan/lease payments. But you can't spend it on a new car. And you can't pre-pay a loan/lease.
5) Payback loans taken out to run the business.

I guess the first [rhetorical] question about the guidelines is... how close will the expenses of someone who took the loan be examined, and what will the penalty be for not adhering to the rules? Will we be seeing videos of the Feds busting violaters as with the PPP loans? There is also the question of personal integrity when it comes to spending the money, even if you are not caught for cheating.

How can drivers best put this money to work if they take the loan? Again, not a lot of leeway here. You can't buy a new ride. You _can_ pay for operating expenses, but many operating expenses like gas, oil, tires, are incurred while earning, so there would be income to pay for that anyway. You can't pay yourself the money unless you are set up as an LLC or some entity allowing for employees. So how best to put the money to work? Here are my thoughts:

1) If you are in the minority and making loan or lease payments on your vehicle you could bank the money and service the loan monthly. You can't prepay the loan, but, is there a limit on how long you can just sit on the money and pay it out monthly? (and spend your Uber income on personal expenses)

2) Likewise, you could pay for all operating expenses from the banked loan and use your Uber income as you see fit, such as for personal expenses. That strategy would instantly raise your operating margin.

3) If someone really really needed to spend all the EIDL funds right away for a non-approved purchase is their a loophole in the law? Since you can use the EIDL money to pay back loans made to keep your business afloat, what if you were to "take out a loan", and then pay the loan in full when the EIDL fund became available? You'd be left with the cash you _borrowed_. It seems that non-installment loans such as credit card can be paid off in full.

What are you spending the money on?


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## SHalester (Aug 25, 2019)

....and answer honestly.


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## TonyStewart (Apr 4, 2020)

How bout paying your income taxes, car insurance, phone bill, new brakes, struts, cleaning supplies


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## _Tron_ (Feb 9, 2020)

I lease my car, so after looking into this, the best plan for me seems to be bank the loan (which I will accept) and use it for the monthly lease and insurance payments. I'm not driving, and I bought an EV on the basis of paying the lease with Uber income, so the loan and its terms seem win-win for my scenario.

The only question is, how much will the loan amount be if I qualify. The app asks for two key pieces of info relative to this gig; your 2019 Gross Revenue and your 2019 Cost of Operation. I don't mind revealing my figures, which were 18.7K and 7.4K respectively (driving two days /week).

We will see.


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## New2This (Dec 27, 2015)

_Tron_ said:


> 4) Car loan/lease payments. But you can't spend it on a new car. And you can't pre-pay a loan/lease.
> 5) Payback loans taken out to run the business.


Haven't gotten a response yet from SBA but got the $1000 grant.

If I get it I'll probably just put it in a separate bank account and let the insurance etc. get taken from it.

For loans, if you're creative, one could try getting a payday/car title loan "to stay in business" then use the EIDL to pay it off.

Not sure it'd work.


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## oldfart (Dec 22, 2017)

I think you are wrong about payroll. I dot believe you have to issue yourself a w-2 or have an Llc I assume you you do need to “prove” your income to qualify. I used bank statements to qualify for a ppp loan I think that would work for the EIDL too use the income summaries provided by Uber and Lyft 
I believe that the application requires a copy of your tax return and they want a record of lost sales. For us that would be the income summaries provided by Uber and Lyft ie gross income

I like the idea of using it for insurance that and any other Fixed business expenses. Ie the things you have to pay whether you are driving or not


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## TonyStewart (Apr 4, 2020)

_Tron_ said:


> I lease my car, so after looking into this, the best plan for me seems to be bank the loan (which I will accept) and use it for the monthly lease and insurance payments. I'm not driving, and I bought an EV on the basis of paying the lease with Uber income, so the loan and its terms seem win-win for my scenario.
> 
> The only question is, how much will the loan amount be if I qualify. The app asks for two key pieces of info relative to this gig; your 2019 Gross Revenue and your 2019 Cost of Operation. I don't mind revealing my figures, which were 18.7K and 7.4K respectively (driving two days /week).
> 
> We will see.


The loan offer is approximately 6 months of 2019 gross minus some expenses.


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## Atom guy (Jul 27, 2016)

It's unlikely that they will audit how you spent the money unless you don't pay it back per the terms. Still, just spend it on what you're supposed to and keep the rest in the bank. "Working capital" just means money in the bank anyway. Nothing says you are forced to spend it all at once.


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## _Tron_ (Feb 9, 2020)

_Tron_ said:


> I don't mind revealing my figures, which were 18.7K and 7.4K respectively (driving two days /week).





TonyStewart said:


> The loan offer is approximately 6 months of 2019 gross minus some expenses.


Got quote notice this evening (SUN) for 12.9K and request to create the portal account. Not sure how they arrived at the amount.

Looks like 1st interest accumulates to $241.86.
Monthly payments starting in year 2 = $60.86

Now it's a question of making the final decision to move forward and see if I get approved.


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## _Tron_ (Feb 9, 2020)

*It felt like a lifetime but the approval notice came through yesterday. So 10 days from notice pf potential loan amount and invitation to create a portal account to notice of approval. That is based on an application from around late March AFAIR.

Had to call the SBA because my stupid bank changed the routing number on my checking account. Had an interesting convo with the agent. These guys are getting NO LOVE from the community they're serving. Very little positive feedback. When I took a few moments to note how great a job they are doing he was truly touched.

So. Suggestion. If you talk or correspond with any of the agencies distributing funds from the relief act (state or Fed), you might want to give them an attaboy for the hard work and long hours getting these checks out. *


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## Tony73 (Oct 12, 2016)

In other words, this loan would be better used in a legit small business. People are getting jailed for misusing this loan. Don’t cry to mamma later.


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## Giantsfan1503 (Sep 18, 2019)

Mostly hookers and gambling


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## _Tron_ (Feb 9, 2020)

Giantsfan1503 said:


> Mostly hookers and gambling


I'm not in to gambling.


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## Giantsfan1503 (Sep 18, 2019)

_Tron_ said:


> I'm not in to gambling.


Do something new. Try 7 hookers at once. We have enough SBA money to go nuts!


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## _Tron_ (Feb 9, 2020)

That's a great idea. I've been meaning to cut back.


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## oldfart (Dec 22, 2017)

_Tron_ said:


> *It felt like a lifetime but the approval notice came through yesterday. So 10 days from notice pf potential loan amount and invitation to create a portal account to notice of approval. That is based on an application from around late March AFAIR.
> 
> Had to call the SBA because my stupid bank changed the routing number on my checking account. Had an interesting convo with the agent. These guys are getting NO LOVE from the community they're serving. Very little positive feedback. When I took a few moments to note how great a job they are doing he was truly touched.
> 
> So. Suggestion. If you talk or correspond with any of the agencies distributing funds from the relief act (state or Fed), you might want to give them an attaboy for the hard work and long hours getting these checks out. *


I set up the portal on June 1 so today was day 10. I had about given up. So thanks for your post

Assuming it comes through I will do what has been suggested here it's going into the bank until I decide how to put it to work.

And about your advice about how to talk to people that are working for you. That's good advice for almost any situation


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## _Tron_ (Feb 9, 2020)

oldfart said:


> I set up the portal on June 1 so today was day 10. I had about given up. So thanks for your post


You're welcome. That is the exact reason I made the post. To give others a landmark.


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## New2This (Dec 27, 2015)

Got the notice to start the portal on Sunday morning May 31st.

Got approval yesterday. E-signed documents immediately.

Woke up this morning to a VERY healthy deposit in my bank account.

Kudos to SBA. 🥳

Time for the hookers and cocaine


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## Giantsfan1503 (Sep 18, 2019)

New2This said:


> Got the notice to start the portal on Sunday morning May 31st.
> 
> Got approval yesterday. E-signed documents immediately.
> 
> ...


I suggest you begin with a nice threesome. A Japanese and a Colombian. It's like peanut butter and jelly. You'll love it!



Giantsfan1503 said:


> I suggest you begin with a nice threesome. A Japanese and a Colombian. It's like peanut butter and jelly. You'll love it!


p.s. **** the cowboys


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## oldfart (Dec 22, 2017)

_Tron_ said:


> You're welcome. That is the exact reason I made the post. To give others a landmark.


Woke up this morning to see the loan docs to sign
now signed and returned

It was 10 days from setting up the portal to my signature on the note


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## Ant4evaL (May 27, 2020)

Putting half of it in the market...Trading forex, nas100, s&p 500 and etc

Remaining sit in the bank for emergency...or wherever the spirit leads...

But not losing it:


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## Giantsfan1503 (Sep 18, 2019)

Ant4evaL said:


> Putting half of it in the market...Trading forex, nas100, s&p 500 and etc
> 
> Remaining sit in the bank for emergency...or wherever the spirit leads...
> 
> But not losing it:


Thats stupid. Hookers and cocaine is the way to go. You only live once.


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## _Tron_ (Feb 9, 2020)

Ant4evaL said:


> Putting half of it in the market...Trading forex, nas100, s&p 500 and etc
> ...
> But not losing it:


Right. There's no chance of losing it trading Forex.

I will invest half as well, but more conservatively than you. I watched a rerun of Demolition Man last night, so I think the smart money is to invest it all in shares of Taco Bell.


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## Stevie The magic Unicorn (Apr 3, 2018)

_Tron_ said:


> Right. There's no chance of losing it trading Forex.
> 
> I will invest half as well, but more conservatively than you. I watched a rerun of Demolition Man last night, so I think the smart money is to invest it all in shares of Taco Bell.












Not a horrible performance over the 19 years, since 01 yum foods has grown 18 times in value.

But for the year not so much, but compared to a lot of other companies and the stock market as a whole it's not in bad shape.


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## _Tron_ (Feb 9, 2020)

Well to answer my own question, I got a 12k loan and what I spend of it will be on car payments and car insurance. I leased an EV on the basis of being able to pay for it from Uber income. So the loan is filling in the income gap nicely.

The main reason I took the loan though is that it is a 30 year term. It is generally considered "bad" to be in debt, but in my view that is not always the case. In periods of high inflation it can be a good strategy to be in debt because you are paying off the loan with cheaper dollars (dollars with less purchasing power than when the loan was taken out).

We may be entering a period of high inflation. The EIDL is 3.75%. If the inflation rate jumps higher than 3.75% then in real terms one would end up paying off the EIDL for far less than the amount borrowed. Again, in terms of actual purchasing power.


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## PowerDriver_BUF (Apr 17, 2018)

_Tron_ said:


> I lease my car, so after looking into this, the best plan for me seems to be bank the loan (which I will accept) and use it for the monthly lease and insurance payments. I'm not driving, and I bought an EV on the basis of paying the lease with Uber income, so the loan and its terms seem win-win for my scenario.
> 
> The only question is, how much will the loan amount be if I qualify. The app asks for two key pieces of info relative to this gig; your 2019 Gross Revenue and your 2019 Cost of Operation. I don't mind revealing my figures, which were 18.7K and 7.4K respectively (driving two days /week).
> 
> We will see.


Did you take the loan? Did you start driving again yet? I am hoping I can use my loan to pay my Car loan and expenses too until I resume driving again, which might be in the Spring of 2021. This loan scares me.


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## New2This (Dec 27, 2015)

PowerDriver_BUF said:


> Did you take the loan? Did you start driving again yet? I am hoping I can use my loan to pay my Carman and expenses too until I resume driving again, which might be in the Spring of 2021. This loan scares me.


I took it. $24,900. I'm sitting on it.

My gut feeling is that either

*it will be forgiven at some point, especially if the economy keeps stalling with lockdowns

or

*as long as you make payments on time you're fine. Mine are $120/month for 30 years (as if I'm gonna live that long) starting in June.

Your attitude is SO different having a stash of cash you're sitting on. MUCH less worry.


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## _Tron_ (Feb 9, 2020)

PowerDriver_BUF said:


> Did you take the loan? Did you start driving again yet? I am hoping I can use my loan to pay my Car loan and expenses too until I resume driving again, which might be in the Spring of 2021. This loan scares me.


Yes and yes.


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## Stevie The magic Unicorn (Apr 3, 2018)

I know a few cab drivers who spent their EIDL money on taxi rentals... then proceeded to pocket virtually their entire earnings for the period they did it (on paper)

Ain't life grand?


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## PowerDriver_BUF (Apr 17, 2018)

New2This said:


> I took it. $24,900. I'm sitting on it.
> 
> My gut feeling is that either
> 
> ...


Yes, I agree about having money in the bank and feeling secure and supported if schit hits the fan. I accepted only $10k. That's enough and only a $49 payment for life. &#128518;
Only thing is, I am afraid to use it because the SBA's definition of Working Capital is vague and not exactly independent contractor/uber driver friendly. I know a lot of people are using it as they see fit and don't seem to care about being audited. 
Guess we just have to follow our gut with how we use the funds.
Good luck to you!


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## LoriO (Jan 9, 2019)

_Tron_ said:


> From reports on these pages, drivers are starting to receive funds from the Small Business Association Emergency Injury Disaster Loan program (SBA:EIDL). After reviewing the guidelines for how the money can be spent, it seems that for Uber/Lyft drivers the menu of allowable expenditures is rather short. As best I understand it the EIDL funds can only be spent on:
> 
> 1) Your business. Not personal expenses.
> 2) As operating capital. So all the expenses we would normally incur driving.
> ...


I was given guidance from an accountant on a platform to write myself mileage reimbursement checks. I am not an Llc and my vehicle is used for both personal and business. Writing mileage checks to myself on a monthly basis allows the funds of that money to be used appropriately. Then at that point I am able to use for personal use in ways I choose.I keep detailed logs and have all of my miles documented in a spread sheet in case they ever ask.


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## B - uberlyftdriver (Jun 6, 2017)

A: survival


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## 808-702drgn (Oct 4, 2020)

Stevie The magic Unicorn said:


> View attachment 474351
> 
> 
> Not a horrible performance over the 19 years, since 01 yum foods has grown 18 times in value.
> ...


Good one, I wouldn't think people needed to eat even during the pandemic. :laugh:


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## SHalester (Aug 25, 2019)

New2This said:


> Your attitude is SO different having a stash of cash you're sitting on.


^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ That. A savings account or a portfolio does wonders. And many people are finder out the error of their way due to them never saving any $$ ever. oopsie.


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