It's essential for everyone who has or is considering an EIDL loan to know and understand the fine print in the loan documents. Here are five key points to pay attention to.
The SBA is allowed to inspect, make copies of, and audit any books, records, and papers relating to your financial or business conditions. The SBA is also allowed to inspect and appraise any of your assets. The SBA can do this themselves or force you to do it at your own expense.
No later than three months after the end of each fiscal year, you have to provide the SBA with your financial statements. In addition, the SBA can ask that you accompany those statements with an ‘Accountant’s Review Report’ prepared by an independent public accountant at your expense.
You may not sell or transfer any collateral used to secure the loan (except normal inventory turnover) without the SBA’s prior written consent.
You must obtain and itemize receipts (paid receipts, paid invoices, or canceled checks) and contracts for all loan funds spent and keep these receipts for three years from the date of the final disbursement. You must provide the itemization and copies of the receipts to the SBA if they request it.
You need written approval from the SBA before you make any distributions to any owner, partner, or employee.
Read the Full Document Here: https://www.nav.com/wp-content/uploads/2020/07/SBA-EIDL-LOAN-DOC-info-retracted.pdf