Thanks @jackofall for the letter, however the letter states that this applies to ALL funds not just SBA funds
It is a limitation on the EIDL borrower from transferring
any of the EIDL
borrower's assets (this would include
any assets owned by the EIDL borrower including cash, cash equivalents, short-term and long-term assets, etc.) to basically anyone, whether a current owner of or partner in the EIDL borrower, or any company owned by an owner or partner, or any other company. This would include any EIDL loan proceeds as well. This language is there to prevent the depletion of the EIDL borrower's assets by the company owners/partners or any company owned by them, or any other unaffiliated company. Note: as shown below for regular 7a loans, they are not referring to assets used in the ordinary course of business.
SBA has a similar prohibition on its SBA 7a loans – see below for example of the language on non-PPP SBA 7a loans:
C. Borrower and Operating Company certify that they will not, without Lender’s prior written consent:
[ ] 3. Transfer of Assets - Sell, lease, pledge, encumber (except by purchase money liens on property acquired after the date of the Note), or otherwise dispose of any of Borrower’s property or assets, except in the ordinary course of business.