Accepting an EIDL loan from SBA as a Sole Proprietor (no LLC)

[James Shahan]

This is a post that details my experience with accepting an EIDL disaster loan amount above 25k where my properties are held in my personal name, no LLC. A lot of people hold properties in their personal name, including myself, and an EIDL loan's terms can be particularly tricky in this situation.

I own properties in my personal name, no LLC, and applied for an EIDL loan due to COVID as a sole proprietor using only my social security number on April 25. My application was submitted within a day or so of it opening to Sole proprietors. I mistakenly applied using zero employees (it appears I could have counted myself as 1 employee), so within a few weeks of applying I received an email saying that I qualified for no grant money (1 employee = $1000 grant that does not need to be repaid).

I have credit monitoring services. And on April 25, the "Us Sm Bus Admin Oda" made a new inquiry and pulled a copy of my credit report. This was not recorded as a hard inquiry, so this inquiry is not on my credit report. The only reason I knew this happened is because my credit monitoring service sent me an alert that an inquiry was made. I assume this was a soft inquiry, and my credit score is in the high 700's.

I heard nothing more until May 25. On that date I received an email that I was approved for more than $25,000, and i chose the full amount that I was approved for. Like most people on here, I was expecting and prepared to explain my numbers, and to speak to someone where I could ask questions. It wasn't until after I chose the amount that I could read the terms and conditions of the loan. Obviously red flags in those terms and conditions have been well represented in multiple threads, where basically accepting the loan you consent to a UCC filing that declares they own an interest in your entire business operations and it's assets. I was primarily concerned because I filed as a sole proprietor and my business and all properties are in my personal name. Do they own an interest in my personal assets, such as my personal home, my car, every asset I own??

The easiest way I saw to make this headache go away is to accept a loan amount below $25k. Turns out, this is not so simple. The first amount you choose (before being able to read the terms and conditions) is the amount that you are set at, there is no changing it. After speaking to several people at the phone number provided, you have to start the entire process over, at step 1 of the application process. You go to the end of the line, and who knows how long until any funds are approved, for the second time.

At this point, it's obviously a deal breaker if there's going to be problems if I go to sell my personal house or assets. I call the SBA with my concerns, trying to get clarification on the topic. All 3 times I called, the initial person I spoke to immediately passed me on to the "Level 2" supervisor. And all 3 times, the "Level 2" supervisor had the deer in headlights tone, and all 3 of them directed me to email my loan portal at, where it would be directed to my loan officer. I did so, on May 26, and to this day have yet to receive a response. I called the SBA again, and confirmed that my email had been received and there was a "notation" on my file for my loan officer to respond to. They were unable to provide any kind of a timeline of when I would receive a response.

I did as much research as I could to find an answer to whether the SBA would own any interest in my personal home and assets. I have yet to find/receive a definitive answer. But from reading blogs and boards about past SBA disaster programs, the SBA does not seem to interfere as long as you repay the loan as per it's terms.

After several days of research and contemplation, I decided to sign the documents and execute the loan. My original plan was to pay off the forbearance balances that I had accumulated on my investment mortgages. Instead I have decided to continue the forbearance, and keep the SBA funds in a separate bank account, untouched, until I can receive a definitive answer from the SBA about their interest in my personal property. Once they give me an answer, I will either pay off the forbearance balances, or repay the SBA loan in full, plus whatever interest it's thus far accumulated.

Upon executing the loan, the funds were transferred in full into my account very quickly, within 1 or 2 business days. I have kept a sharp eye on my personal credit report. Thus far, a little more than 3 weeks after signing the documents and accepting the funds, there has been no filing, or no further inquiry, on my personal credit report.  I am assuming that eventually some a filing on my credit report will be made, because a $25k liability has to be documented somewhere.  I am fine being personally responsible for the loan, as long as I am free to do as I please with my personal property.

I will update this post when/if I receive a definitive response from the SBA. And I will also update it if there is further activity on my credit report.