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Can My Economic Injury Disaster Loan (EIDL) & Emergency Advance For Coronavirus Relief Be Forgiven?

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Chris Motola

Chris Motola

Finance Writer at Merchant Maverick
Chris Motola is a writer, programmer, game designer, and product of NY. These days he's mostly writing about financial products, but in a past life he wrote about health care and business. He's a graduate of the University of Central Florida.
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114 Comments

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    BG

    I understand that the EIDL *loan*, which I received last year, is not forgivable. Is it possible and legal to try and qualify for a PPP loan now, and use that money to pay off the EIDL? My loan was small but my business has not recovered through COVID yet, and even with the year deferment I don’t want my interest to keep rising because I can’t afford to pay this loan off yet. I severely underestimated the impact that COVID would have on my industry.

      Jessica Dinsmore

      Hi BG,

      Unfortunately as of May 5, 2021, the SBA has stopped accepting PPP applications due to lack of funds. You may however be able to tap into a small business grant or two. We have posts on a variety of small business grants, Nonprofit grants, Startup grants and how to find them, as well as tips on how to get your grant application noticed. Additionally, you may be eligible to increase your EIDL loan amount, if that is something you’d be interested in. I hope that at least one of these resources is helpful to you–and if you have any additional question please reach back out to us. Best wishes to you!

        Yvonna Martin

        I received EIDL loan in 2020 but unfortunately I had to close my business anyway. Is there an exception to repayment if my business is now closed? Can I get any forgiveness for the loan? Or worse, am I going to be required to pay it back in full if I contact SBA with this question?

          Erica Seppala

          Hi Yvonna!

          I’m sorry to hear about the closure of your business. Unfortunately, even if your business closes, you will be required to repay your EIDL. Unfortunately, if you do not pay, there are actions that the federal government will take. If you signed a personal guarantee to receive your loan, your personal assets may be seized to secure the debt. If you put collateral up for the loan, that collateral can also be seized if you default on the loan.

          Even if you didn’t sign a personal guarantee or pledge collateral, there are still actions the government may take, including seizing business assets or business income tax refunds. The default may also be reported on your credit, significantly lowering your score and affecting your chances of borrowing in the future. There’s a good article here that explains what happens if you default on your EIDL.

          You may also opt to file bankruptcy and can potentially have this loan discharged. But there are costs and drawbacks associated with bankruptcy, so it’s best to consult an attorney for more information on whether this is an option that would work for you.

          The good news is that EIDL payments have been deferred until 2022. While you will still have to pay back the loan, this does buy you some extra time to explore your options for repayment. Good luck!

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