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Going in circles with the EIDL loans. Want to get clarity on my understanding of the Cares Act on the EIDL loans and the expenses paid with it. My understanding is that the amount received as EIDL (assuming it is going to be repaid back as a loan); is not considered taxable (excluded from Gross Income); however, the business expenses paid with it may still be deductible? (May show as a huge loss for the year in some cases). 

This is coming from the Covid-Related Tax Relief Act of 2020: am I understanding it correctly?

Sec. 8. Clarification of tax treatment of certain loan forgiveness and other business
financial assistance under the coronavirus relief legislation. The provision clarifies that
gross income does not include forgiveness of certain loans, emergency EIDL grants, and certain
loan repayment assistance, each as provided by the CARES Act. The provision also clarifies that
deductions are allowed for otherwise deductible expenses paid with the amounts not included in
income by this section, and that tax basis and other attributes will not be reduced as a result of
those amounts being excluded from gross income. The provision is effective for tax years ending
after date of enactment of the CARES Act. The provision provides similar treatment for Targeted
EIDL advances and Grants for Shuttered Venue Operators, effective for tax years ending after the
date of enactment of the provision.

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