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West Palm Beach Bankruptcy & Business Attorneys > > Business > EIDL Hardship Accommodation Versus Reorganization Bankruptcy

EIDL Hardship Accommodation Versus Reorganization Bankruptcy


Small businesses throughout South Florida are struggling with repayment concerning loans from the US Small Business Administration (SBA) provided as part of COVID-19 pandemic relief. In particular, many smaller companies in West Palm Beach and the surrounding area are facing repayment of loans received through the Economic Injury Disaster Loan (EIDL) program, provided by the SBA. In short, many businesses do not have the money to repay their EIDL loans and are struggling, With recent news that the SBA would expand its hardship accommodation program for EIDL loan holders, those businesses are now trying to gain a clearer understanding of whether they should be considering and applying for a hardship accommodation, or whether they should be considering bankruptcy.

In order to determine the best path forward for your business, it is essential to seek legal advice from a business law attorney in the West Palm Beach area. In the meantime, we can provide you with more information about EIDL hardship accommodations versus reorganization bankruptcy, and ways to consider what your options might be.

What Can an EIDL Hardship Accommodation Do to Help My Business? 

When EIDL loans became due, the SBA announced the possibility of a hardship accommodation for small businesses that owe money on these types of loans. What can a hardship accommodation do to help your business?

If your business cannot currently repay its EIDL loan that has come or is coming due, a hardship accommodation could reduce the total payment you owe. If your business has never sought a hardship accommodation before, you could be eligible to pay 10 percent of your payment for six months, and you could renew for another six months of paying only 10 percent. For the third renewal, a business can be eligible to make payments that equal 50 percent of the amount owed, and then 75 percent for a fourth six-month period. A lawyer can discuss your eligibility with you and can assist you in applying for an initial hardship accommodation or renewal.

How Can a Reorganization Bankruptcy Help My Business? 

If your business is not eligible for a hardship accommodation, or if you have already used up all of the available hardship accommodation renewals, or if your business is struggling with more than just an EIDL loan, you might be considering bankruptcy. Generally speaking, there are two kinds of bankruptcies that are available to businesses: liquidation bankruptcy (which requires closing the business permanently) and reorganization bankruptcy (which does not require closing the business even in the short-term).

When a business does not see any financial path forward, it may be time to consider a liquidation bankruptcy under Chapter 7. Yet for many businesses, there are possible paths for catching up with creditors and getting back on track financially. For these businesses, it may be possible to file Chapter 11 bankruptcy or Subchapter V bankruptcy, which are both types of reorganization bankruptcies. Through a reorganization bankruptcy, your business can create a repayment plan and catch up with creditors over time on a wide range of loans that are currently past due.

Contact a West Palm Beach Business Law Attorney Today 

If your business is struggling to make EIDL loan payments, it is essential to seek advice from an experienced West Palm Beach business lawyer at Kelley Kaplan & Eller, PLLC as soon as possible. We have significant experience handling EIDL hardship accommodations as well as representing small businesses in South Florida in Chapter 11, Subchapter V, and Chapter 7 bankruptcy proceedings. Do not hesitate to contact our firm to discuss the options that may be available to your business and to get started on either an EIDL hardship accommodation application or a business bankruptcy filing.




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