SBA EIDL Loan Terms | Is It Worth It For $25K+?
Thought the EIDL contract terms for those approved needed its own thread.
I was approved and I'm at the signature stage of a loan above $25K. I understand the collateral, but the Requirements for Relative Collateral are a bit much. Not to mention all the other verbiage about requesting an audit of your business at your expense whenever they feel like it. If it were a bank I wouldn't have a problem, but the federal government is another issue.
I'm interested in what others think of the terms especially the ones below:
For loan amounts of greater than $25,000, Borrower hereby grants to SBA, the secured party hereunder, a
continuing security interest in and to any and all “Collateral” as described herein to secure payment and
performance of all debts, liabilities and obligations of Borrower to SBA hereunder without limitation, including
but not limited to all interest, other fees and expenses (all hereinafter called “Obligations”). The Collateral
includes the following property that Borrower now owns or shall acquire or create immediately upon the
acquisition or creation thereof: all tangible and intangible personal property, including, but not limited to: (a)
inventory, (b) equipment, (c) instruments, including promissory notes (d) chattel paper, including tangible
chattel paper and electronic chattel paper, (e) documents, (f) letter of credit rights, (g) accounts, including
health-care insurance receivables and credit card receivables, (h) deposit accounts, (i) commercial tort claims, (j)
general intangibles, including payment intangibles and software and (k) as-extracted collateral as such terms
may from time to time be defined in the Uniform Commercial Code. The security interest Borrower grants
includes all accessions, attachments, accessories, parts, supplies and replacements for the Collateral, all
products, proceeds and collections thereof and all records and data relating thereto.
· For loan amounts of $25,000 or less, SBA is not taking a security interest in any collateral.
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SBA Form 1391 (5-00) Ref 50 30
Doc # L-01-0476006-01
SBA Loan #8496557408 Application #3600074047
DocuSign Envelope ID: CA47909F-9BAE-44B7-ACA5-7A831F089087
In Process
REQUIREMENTS RELATIVE TO COLLATERAL
· Borrower will not sell or transfer any collateral (except normal inventory turnover in the ordinary course of
business) described in the "Collateral" paragraph hereof without the prior written consent of SBA.
· Borrower will neither seek nor accept future advances under any superior liens on the collateral securing this
Loan without the prior written consent of SBA.
USE OF LOAN PROCEEDS
· Borrower will use all the proceeds of this Loan solely as working capital to alleviate economic injury caused by
disaster occurring in the month of January 31, 2020 and continuing thereafter and to pay Uniform Commercial
Code (UCC) lien filing fees and a third-party UCC handling charge of $100 which will be deducted from the
Loan amount stated above.
REQUIREMENTS FOR USE OF LOAN PROCEEDS AND RECEIPTS
· Borrower will obtain and itemize receipts (paid receipts, paid invoices or cancelled checks) and contracts for all
Loan funds spent and retain these receipts for 3 years from the date of the final disbursement. Prior to each
subsequent disbursement (if any) and whenever requested by SBA, Borrower will submit to SBA such
itemization together with copies of the receipts.
· Borrower will not use, directly or indirectly, any portion of the proceeds of this Loan to relocate without the
prior written permission of SBA. The law prohibits the use of any portion of the proceeds of this Loan for
voluntary relocation from the business area in which the disaster occurred. To request SBA's prior written
permission to relocate, Borrower will present to SBA the reasons therefore and a description or address of the
relocation site. Determinations of (1) whether a relocation is voluntary or otherwise, and (2) whether any site
other than the disaster-affected location is within the business area in which the disaster occurred, will be made
solely by SBA.
· Borrower will, to the extent feasible, purchase only American-made equipment and products with the proceeds
of this Loan.
· Borrower will make any request for a loan increase for additional disaster-related damages as soon as possible
after the need for a loan increase is discovered. The SBA will not consider a request for a loan increase received
more than two (2) years from the date of loan approval unless, in the sole discretion of the SBA, there are
extraordinary and unforeseeable circumstances beyond the control of the borrower.