If you’re behind on a COVID Economic Injury Disaster Loan or worried you soon will be, your EIDL loan repayment options fall into four buckets: pay in full through the SBA Loan Portal, apply for the Hardship Accommodation Plan to temporarily shrink your monthly payment, negotiate a settlement through an Offer in Compromise, or, if the business is closing, contact the SBA before the loan gets referred to Treasury for enforced collection. Every dollar of an EIDL still has to be repaid, and each option has trade-offs worth understanding before you pick one.1U.S. Small Business Administration. COVID-19 Economic Injury Disaster Loan
Where Your Balance Stands Now
The 30-month deferment the SBA extended to all COVID EIDL borrowers has expired for everyone. Payments of principal and interest are due monthly, and roughly 3.9 million loans are now in active repayment.2U.S. Small Business Administration. SBA Administrator Guzman Announces Key Policy Change
The deferment paused payments but not interest. Interest kept accruing at 3.75% for businesses (2.75% for nonprofits) throughout the 30-month window and then capitalized onto the principal. On a $150,000 loan, that added roughly $14,000 before the first payment was due, so your current balance is almost certainly higher than what you originally borrowed, and your monthly payment reflects the larger number.3U.S. Small Business Administration. About COVID-19 EIDL
There is no prepayment penalty. If cash flow allows, occasional lump-sum payments cut your total interest over the 30-year term. You make one-time or recurring payments through the SBA Loan Portal at lending.sba.gov, which is also where you check your balance, see your next due date, and change your bank information.4U.S. Small Business Administration. Make a Payment to SBA
The Hardship Accommodation Plan
If you can’t manage the full monthly payment, the Hardship Accommodation Plan lets you pay as little as $25 per month for an initial six-month period, with payments gradually stepping up over a multi-year timeframe after that.5U.S. Small Business Administration. Small Business Administration Announces Further Action to Help PPP and COVID EIDL Borrowers
Interest never pauses. While you make reduced payments, unpaid interest keeps compounding on your balance, so you’ll owe more when full payments resume than you did going in. The trade-off is usually worth it compared with missing payments outright, but treat the HAP as a bridge, not a long-term plan.
Eligibility extends to loans in repayment, past due, or in default, as long as the account hasn’t been referred to Treasury for cross-servicing. How you apply depends on loan size:
- Loans of $200,000 or less: enroll directly through the SBA Loan Portal.
- Loans over $200,000: contact the COVID-19 EIDL Servicing Center to enroll.
You can request the HAP starting 60 days before your next payment is due, so you don’t have to wait until you’re already behind. Applying before you miss a payment is always smarter.
Settling for Less With an Offer in Compromise
COVID-19 EIDL loans cannot be forgiven outright. The closest path to reducing what you owe is an Offer in Compromise, filed on SBA Form 1150, in which you propose paying a lump sum less than the full balance in exchange for the SBA releasing the rest.6U.S. Small Business Administration. SBA Form 1150 Offer in Compromise
The SBA will only consider an offer after any collateral securing the loan has been liquidated under agency guidelines. For loans over $25,000, where the SBA holds a blanket lien on business assets, that means those assets have to be dealt with first.3U.S. Small Business Administration. About COVID-19 EIDL Acceptance isn’t guaranteed. The SBA evaluates whether the offer represents the maximum it could reasonably collect given your finances, and a poorly structured proposal gets rejected. A CPA or attorney experienced in SBA workouts is usually worth the cost.
If You’re Closing the Business
Shutting down does not cancel the loan. What the SBA can pursue afterward depends on what you signed:
- Loans of $25,000 or less: no collateral, no personal guarantee. Recovery is limited to any remaining business assets.
- Loans above $25,000: the SBA holds a blanket lien on business assets like equipment, inventory, and receivables, and can seize them.
- Loans above $200,000: you also signed a personal guarantee, so the SBA can pursue your personal assets if the business can’t cover the debt.3U.S. Small Business Administration. About COVID-19 EIDL
Contact the SBA before you shut down. The agency directs borrowers anticipating closure or liquidation to send a message through the SBA Loan Portal or email COVIDEIDLServicing@sba.gov.7U.S. Small Business Administration. Manage Your EIDL Reaching out early preserves workout options that disappear once the loan moves into enforced collection.
What Default Actually Triggers
Your loan is delinquent the moment you miss a payment. The SBA sends warning letters, but the real turning point is 120 days of delinquency, when your account may be referred to the Treasury Offset Program.7U.S. Small Business Administration. Manage Your EIDL
The Treasury Offset Program intercepts federal payments owed to you and redirects them to the debt. That includes tax refunds, Social Security benefits, and federal vendor payments. You’ll get a letter at least 60 days before the offset begins, explaining the debt and your rights to dispute it or enter a payment agreement.8Bureau of the Fiscal Service. What Is the Treasury Offset Program If an intercepted payment partially covers the debt, you get the remainder; if it doesn’t, the whole payment is taken.
Loans that stay delinquent past further thresholds get transferred to the Treasury’s Cross-Servicing Program. At that point the SBA is no longer your servicer and cannot help. You deal only with the Treasury Bureau of the Fiscal Service, which has broader enforcement tools, and for loans with a personal guarantee it can go after the guarantor’s personal assets.
There’s a narrow reinstatement window if the SBA has charged off your loan but not yet handed it to Treasury. Log into the SBA Loan Portal, submit a payment for the full overdue balance, then email COVIDEIDLServicing@sba.gov to request reinstatement to current status.7U.S. Small Business Administration. Manage Your EIDL That window closes permanently once Treasury takes over.
Tax Angles Worth Knowing
Interest you pay on your EIDL is generally deductible as a business expense. Most small businesses can deduct every dollar; a limitation under Section 163(j) caps the deduction at 30% of adjusted taxable income for larger businesses, but most EIDL borrowers fall well below that threshold.9Internal Revenue Service. Questions and Answers About the Limitation on the Deduction for Business Interest Expense
If any portion of the debt is canceled through an Offer in Compromise or other settlement, the IRS generally treats the forgiven amount as taxable income in the year of cancellation. If $600 or more is canceled, the SBA sends a Form 1099-C.10Internal Revenue Service. About Form 1099-C, Cancellation of Debt Some exceptions apply, including an insolvency exclusion if your total debts exceed the fair market value of your assets at the time of cancellation.11Internal Revenue Service. Topic No. 431, Canceled Debt – Is It Taxable or Not If you settle, plan for the tax bill or ask a tax professional whether insolvency applies to your situation.
Where to Get Help
For most servicing questions, the SBA Loan Portal at lending.sba.gov is the starting point. For issues the portal can’t handle:
- Email CESC@sba.gov for general COVID EIDL servicing questions, or COVIDEIDLServicing@sba.gov for business closure, reinstatement, or loan workouts.
- Call 833-853-5638 (TTY: 711) for payment-related assistance.
If your loan has already moved to Treasury Cross-Servicing, the SBA can no longer help, and you’ll need to contact the Treasury Bureau of the Fiscal Service directly.7U.S. Small Business Administration. Manage Your EIDL The earlier you engage, the more choices you keep.