What options exist for small businesses struggling to repay an EIDL loan?
Executive summary
Small businesses repaying COVID-era EIDL loans have limited on-ramps: SBA extended deferrals (30 months for 2020–22 loans) and offered temporary programs such as a Hardship Accommodation Plan, but SBA has closed automated HAP enrollment and the program ended in early 2025; Congress and analysts have discussed policy options including reduced interest rates, non‑accruing deferments, grants, or forgiveness as responses to widespread borrower distress and large charge‑offs ($78.8 billion charged off through March 31, 2024) [1] [2] [3]. Available sources do not mention private-market refinance options for COVID EIDLs.
1. What the federal record shows: deferred starts, big charge‑offs, few universal fixes
Congressional analysis and SBA reporting document that the agency pushed many COVID EIDL payments well into the repayment phase—extending deferment to 30 months for loans approved in 2020–2022—so many borrowers only recently began repayment; as the program moved into repayment SBA recognized $78.8 billion in charge‑offs through March 31, 2024, and Congress has discussed relief options ranging from lower rates to forgiveness [1] [2].
2. Immediate borrower options from the SBA: assistance, not an open auto‑enrollment
The SBA says automated enrollment in the Hardship Accommodation Plan is closed as of March 19, 2025, but borrowers “experiencing short‑term financial hardship can still request repayment assistance” through the MySBA Loan Portal or direct SBA channels; in short, self‑help avenues remain but the streamlined HAP self‑enrollment is gone [3].
3. What HAP and other temporary measures actually did—and what ended
Reporting from deBanked and other contemporaneous sources described HAP as a six‑month payment reduction for borrowers entering repayment, designed to ease the transition when deferments expired; that program’s automated enrollment and some elements are no longer available, leaving individualized requests as the main path for relief [4] [3].
4. Policy solutions under discussion in Congress — broad menu, no enacted sweeping fix yet
Congressional discussion lists several policy choices to help struggling borrowers: reduce interest rates, extend deferments without accrued interest, provide grant assistance, or implement loan forgiveness. Those options reflect debates but do not indicate a single, implemented nationwide remedy at present [1] [2].
5. Practical next steps for small businesses who can’t pay now
Borrowers should (a) create or log into a MySBA Loan Portal account to monitor balances and request assistance, (b) file a formal repayment assistance request with the SBA if experiencing short‑term hardship, and (c) keep careful records of communications because automated HAP enrollment has closed—SBA guidance explicitly points to individualized requests as the active route [3] [4].
6. What happens if a business closes or defaults — collateral and collection realities
Guidance on EIDLs indicates long repayment terms (up to 30 years) and collateral rules depending on loan size; industry write‑ups note loans must be repaid even if a business closes and that SBA may pursue collections where recovery is possible, though specific outcomes vary by case and are not fully detailed in these sources [5] [6]. Available sources do not mention a standardized federal write‑down or blanket forgiveness process already in force.
7. The political and practical subtext: relief is contested and incomplete
Congressional reports and watchdog coverage show two tensions: a political appetite in some quarters to help borrowers further (via rate cuts, non‑accruing deferments, grants or forgiveness), and fiscal and administrative reluctance to institute open‑ended forgiveness, which helps explain why the response so far has been a mix of temporary programs, individualized assistance, and ongoing deliberation rather than a uniform solution [1] [2].
8. How to follow developments and what to expect next
Watch congressional reporting, SBA notices to borrowers, and the MySBA portal for formal rule changes or new relief programs; the Library of Congress/Congressional Research Service material and SBA pages cited above are the primary tracks where policy options and operational changes have been logged [1] [3].
Limitations and caveats: reporting and agency pages document program extensions, charge‑offs, and discussion of policy options, but available sources do not describe private refinancing routes for COVID EIDLs, nor do they show a currently enacted, broad loan forgiveness program for EIDL borrowers [1] [3].