What If You Can't Pay Back Your EIDL Loan?

January 10, 2023 2 min read

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Millions of EIDL loan borrowers now have their first payments due, after 30 months of deferment — but what happens if you cannot pay back your EIDL loan? Here's what you need to know, plus how to get help if you're having difficulty paying the EIDL loan.

4 Million COVID EIDL Loans Payments Are Becoming Due

The US Small Business Administration (SBA) approved over $378 billion in COVID EIDL loans to over 3.9 million small business owners. After 30 months of payment deferment, most of these loans now have their first payment due.

These monthly payments range from a few hundred dollars to several thousand dollars per month — depending on the size of the EIDL loan.

What happens however if you are having difficulty paying these back on time or at all? Many businesses are still facing cash flow challenges, and for some this may get worse in 2023. Here's what you need to know.

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The SBA Has Given a 6 Month Partial Payment Option

Back in November 2022, the SBA rolled out a "Hardship Accommodation Plan" for COVID EIDL borrowers who are having difficulty making payments.

For borrowers who took $200,000 or less, they have the option of automatically enrolling to make as little as 10% of their monthly payment for 6 months. Borrowers can opt-in to this on their SBA CAFS dashboard.

For borrowers who took more than $200,000 who are facing payment challenges, there's an option to reduce payment as well. However, the borrower needs to reach out to the SBA directly to get assistance.

If You Don't Make EIDL Payments, What Are The Consequences?

What happens if despite your best efforts to make things work out for your business, you just cannot afford the monthly COVID EIDL payments?

There's a few scenarios, depending on the size of the loan you took out. In general this is similar to if you default on other loans, whether it's a business or personal loan.

  • EIDL Loan Less Than $25,000: If you took an EIDL loan less than $25,000, this is unsecured. That means, essentially, if you close your business, the SBA can't do anything about it.
  • EIDL Loan Between $25,000 and $200,000: This is a loan secured by the assets of the business. If you cannot repay the EIDL loan, then the SBA can come after your business assets. If your business assets aren't worth the amount of the EIDL loan, they may not go after assets in this case.
  • EIDL Loan Greater Than $200,000: In this case, you have personal liability for the loan balance, even if the business closes. The SBA could come after personal assets, such as your home, even if the business closes. Personal bankruptcy would be the only way out of a scenario like this.

What If You Need More Funding Help For Your Business?

The SBA has other funding programs that are going strong, including the most popular program, the SBA 7(a) program for working capital. If you need smaller amounts of funding, there are also public and private grants available, depending on your type of business and where you're located. If you want 1-1 help exploring and applying for options — or growing your business revenue — take a look at Skip membership options.

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