Recordkeeping for Your EIDL Loan

By Owen Yin on June 15, 2020

Editor’s note: The EIDL program is reopened as of June 15, 2020. You can apply today through the SBA’s online portal.

The SBA’s Economic Injury Disaster Loan (EIDL) is a special loan backed by the government that offers an unusually low interest rate.

And because it’s a government loan with unusual benefits, the government needs to know that the funds are being spent in the right way. Which means your EIDL loan comes with bookkeeping and recordkeeping requirements you might not be aware of.

One section of the EIDL agreement, “Books and Records”, outlines your bookkeeping and recordkeeping responsibilities, such as maintaining accurate books for the most recent five years of operation.

Here are some of the conditions of the EIDL loan agreement:

  • Maintain “current and proper” records for the most recent five years until three years after your loan maturity or after the loan has been paid in full, whichever comes first. Records include:
    • Financial and operating statements
    • Insurance policies
    • Tax returns and related filings
    • Records of earnings or dividends distributed
    • Records of compensation to owners or shareholders
  • Allow the SBA to inspect or audit all books and records
  • Allow the SBA to inspect or appraise any business assets
  • Provide financial statements to the SBA within three months of the end of your fiscal year
  • Pay for a review of financial statements by an independent public accountant, if requested by the SBA
  • Allow all Federal, State, and municipal governments to provide the SBA with relevant documents if requested by the SBA

How do I maintain good records?

An accurate and up-to-date set of books will allow the SBA (and you!) to get a clear look at the financial health of your business, using financial documents such as your balance sheet and income statement.

You’ll need to track and categorize all your business expenses. Receipts and invoices should be digitally filed and recorded. It can take some time, but it’s well worth the effort to be able to see where your money is going and ensure you’ll be able to get the most of your eligible deductions come tax season.

Our Bookkeeping Basics guide can help you with the basics, and includes a free downloadable PDF you can reference.

Are my current records okay?

For SBA-ready books, you should have completed financials for the last five years of your business: a fully completed and accurate ledger of transactions, list of accounts, an income statement, and balance sheet.

That will put you in the best possible position if the SBA chooses to audit your business. Plus, preparing regular financial statements is a recommended best practice for understanding how your business is performing. These documents also allow your CPA or accountant to prepare an accurate tax return.

If you’re behind on your books, Bench can help. Our catch up bookkeeping service will provide you with a year end financial package for every year completed, which includes all the documents you need.

More resources


This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.

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