Can I Use SBA Disaster Loan to Buy a Car?

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SBA Disaster Loans

  • SBA disaster loans can be used to repair or replace real estate, personal property, machinery and equipment, and inventory and business assets damaged or destroyed in a declared disaster.

SBA Economic Injury Disaster Loan (EIDL)

  • Small businesses, small agricultural cooperatives, and most private nonprofit organizations located in a declared disaster area and which have suffered substantial economic injury may be eligible for an SBA Economic Injury Disaster Loan (EIDL).

SBA Startup Loans

  • SBA startup loans typically require an equity injection of at least 10% and there are a few options that don’t require a cash down payment.

SBA 504 Loan

  • The SBA 504 Loan was specifically designed to help growing small businesses expand by purchasing fixed assets such as real estate.

SBA Loans Overview

  • The most popular SBA loan program is the 7(a) which provides up to $5 million in financing for new or growing businesses.
  • CDC/504 loans are also used by small businesses but they’re targeted at real estate or equipment purchases rather than business start-ups or expansions.

Use of SBA Loans

  • SBA disaster loans provide financing to repair or replace assets damaged in a declared disaster.
  • SBA 504 loans are for purchasing fixed assets like real estate or equipment, not working capital or vehicles.
  • Can I use my SBA loan to buy a car?

Eligibility and Taxation

  • Small businesses located in a disaster area may get an SBA Economic Injury Disaster Loan if they suffered economic injury.
  • Taxes on EIDL funds work like other business loans. EIDL funds are not taxable business income.

Down Payments and Ownership Changes

  • SBA business loans require up to a 30% down payment.
  • Borrowers can borrow money for the 504 loan down payment.
  • SBA loans can finance a change in ownership through stock purchase or asset purchase.

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