Can Your SBA EIDL Loan Be Forgiven?

Economic Injury Disaster Loan (EIDL) funds are generally not forgivable and must be repaid, unlike some other pandemic-era relief programs. The U.S. Small Business Administration (SBA) designed the EIDL program to provide working capital to businesses experiencing economic injury due to a declared disaster. This financial support helps cover operating expenses that cannot be met as a direct result of the disaster.

Understanding EIDL Loans and Advances

EIDL loans are traditional loans provided directly by the SBA to help businesses meet financial obligations and operating expenses. These loans accrue interest and are structured with repayment terms of up to 30 years. For small businesses, the interest rate was typically 3.75%, while nonprofit organizations received a rate of 2.75%.

Distinct from EIDL loans were the various EIDL advances, which functioned more like grants. These included the Emergency EIDL Grant, Targeted EIDL Advance, and Supplemental Targeted Advance. These advance payments did not need to be repaid and were intended to provide immediate relief. For instance, the Emergency EIDL Grant provided up to $10,000, and the Targeted EIDL Advance offered up to $10,000 to eligible businesses in low-income communities. The Supplemental Targeted Advance provided an additional $5,000.

If a business received an EIDL advance, the amount of that advance was typically deducted from the total EIDL loan amount ultimately disbursed. This mechanism ensured that the grant portion provided immediate, non-repayable funds, while the remaining balance was a repayable loan.

Repaying Your EIDL Loan

Payments typically began after an initial deferment period, which was often two years from the loan’s origination date. However, interest continued to accrue during this deferment period, meaning the loan balance grew even without payments.

The SBA offers multiple convenient ways to make loan payments. Borrowers can make payments online through the MySBA Loan Portal, which is the SBA’s preferred method. This portal allows for one-time payments using a bank account (ACH), PayPal, or debit card. For those preferring other methods, payments can also be made via a bill pay service through a bank or by mail.

When paying online, borrowers need their 10-digit SBA loan number. While the MySBA Loan Portal facilitates one-time payments, setting up recurring payments might still require using Pay.gov. There are no prepayment penalties associated with EIDL loans.

Managing Your EIDL Loan

Effective management of an EIDL loan involves utilizing available resources and understanding options for financial difficulty. The MySBA Loan Portal is a central tool for borrowers, allowing them to view loan details, access statements, and monitor payment history. This portal also provides a way to send messages directly to the SBA for assistance.

For questions or issues related to the loan, borrowers can contact the COVID-19 EIDL Customer Service via phone at 833-853-5638 or email at [email protected]. These channels are available for various inquiries.

If a borrower faces financial hardship, the SBA offers a Hardship Accommodation Plan (HAP). This plan adjusts repayment terms, potentially reducing monthly payments to as little as 10% for a six-month period. While this provides temporary relief, interest continues to accrue, which can lead to a larger final payment.

Failing to repay an EIDL loan can lead to consequences. Defaulting can negatively impact credit scores and result in collection actions by the SBA. The SBA may pursue legal action, including placing liens on business assets or personal property if a personal guarantee was provided, and the loan could be referred to the U.S. Treasury for collection.