16 Sep 23

💰 EIDL Forgiveness – Can SBA EIDL Loans Be Settled?

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Last Updated on: 24th September 2023, 09:04 pm

EIDL Loan Forgiveness and Settlement Options

What are EIDL Loans?

EIDL stands for Economic Injury Disaster Loan. These loans are provided by the Small Business Administration (SBA) to help small businesses withstand temporary loss of revenue caused by a declared disaster, such as the COVID-19 pandemic.

Key features of EIDL loans:

Low interest rate (around 3.75% currently)
Long repayment term (up to 30 years)
Use of funds is flexible – working capital, paying debt, payroll, accounts payable, etc.

EIDL Loan Forgiveness Programs

The SBA does not currently have a forgiveness program for EIDL loans. Borrowers must repay these loans in full as agreed under the loan terms.

Congress would need to pass legislation authorizing forgiveness for all or part of EIDL loan balances. Currently, there are no laws enacted that provide for widespread EIDL forgiveness.

The SBA did offer some deferment options early in the pandemic allowing borrowers to pause payments temporarily. However, interest continued accruing during deferment.

Settling EIDL Loans for Less than Owed

It is generally not possible to settle EIDL loans for less than the amount owed. The SBA expects full repayment of the loan principal plus all accrued interest.

However, in rare cases the SBA may accept a settlement offer if the borrower can prove extreme financial hardship and inability to repay. These situations are limited and would require speaking to the SBA directly to discuss options.

Borrowers behind on payments could potentially qualify for SBA disaster loan servicing that restructures the debt. This may include lower monthly payments and an extended maturity date. But the full principal and interest will eventually need to be repaid.

Other Potential Loan Forgiveness Options

While EIDL itself does not currently offer forgiveness, some borrowers may qualify for forgiveness under other SBA loan programs like the Paycheck Protection Program (PPP).

If a borrower received both EIDL and PPP loans, the amount forgiven under PPP can be applied toward the EIDL balance. This indirectly allows some forgiveness of the EIDL debt.

Borrowers in very dire situations may also consider bankruptcy as an option to discharge all or part of an EIDL loan. However, bankruptcy should not be taken lightly due to the long-term impacts on credit and finances.


Overall, receiving true loan forgiveness for an EIDL loan remains unlikely without Congressional action. Borrowers should plan to repay the balances in full unless they can demonstrate extreme hardship that may warrant a settlement in limited cases. Consulting an accountant, business lawyer or the SBA directly can help distressed borrowers understand all options.