EIDL Loans Now in Collection for Struggling Small Business Owners

For about a year now, small businesses in South Florida have begun having to make payments on loans they received through the Economic Injury Disaster Loan (EIDL) program during the COVID-19 pandemic. As of the beginning of 2026, the US Small Business Administration (SBA) has been making even more pronounced efforts to recover money owed on these loans. According to a recent report in The Business Journals, federal debt collectors are upping those collection efforts, and “record numbers” of small businesses with outstanding EIDL loans are facing increased contact. More small business owners are also becoming delinquent on these loans and trying to determine what kinds of options are available to them.

If you are a small business owner in South Florida and you are having difficulty repaying your EIDL loan, what do you need to know about new collection efforts in 2026? In addition, you are likely wondering about options for addressing the debt you owe, and our West Palm Beach bankruptcy lawyers can provide you with more information about bankruptcy options for catching up on your EIDL loan and keeping your business open.

SBA is Charging Off EIDL Loans as Debt Collection Efforts Increase

According to the recent article in The Business Journals, the SBA has begun charging off approximately 1 out of every 5 EIDL loans, or about 20 percent of all EIDL loans. Once those loans are charged off, it does not mean that the small business is no longer liable for the money. Rather, it means that debt collectors within the US Department of the Treasury, rather than the SBA, are the ones contacting debtors and attempting to recoup some of the money borrowed.

What does this look like in practice? After 120 days of failing to make a payment, the EIDL loan becomes delinquent. Once the debt becomes delinquent and is charged off, it is ultimately sent to the Treasury for collections. The Treasury Offset Program (TOP) is the program within the Treasury that is tasked with collecting delinquent debts, including EIDL debt and many other types of debts owed to both state and federal agencies. The Treasury adds a “collection fee” of 30 percent to the total debt. Accordingly, once EIDL loans go into collections, small business owners owe even more.

Bankruptcy Options for EIDL Loans While Keeping Your Business Open

Your business may be able to file for a type of reorganization bankruptcy that will allow your business to catch up on EIDL loan debt owed while also keeping your business open and operational. Depending on the details of your small business — including its structure and other factors — you could be eligible for Subchapter V bankruptcy, a traditional Chapter 11 filing, or even a Chapter 13 filing if you own a sole proprietorship.

Given that many small business owners made personal guarantees on larger EIDL loans, a reorganization bankruptcy can get your business on track while eliminating the stress of needing to personally repay the EIDL loan.

Contact Our West Palm Beach Bankruptcy Attorneys Today 

Are you struggling to repay your EIDL loan? You are among thousands of small business owners in this situation, and it is important that you know you may have options for getting back on track with debt while keeping your business open and operational. An experienced West Palm Beach bankruptcy lawyer at Kelley Kaplan Delaney & Eller, PLLC, PLLC can discuss your business’s options for a reorganization bankruptcy, including the possibility of a Subchapter V filing or a traditional Chapter 11 filing. Contact our firm today to learn more about how we can assist your business with a reorganization bankruptcy in South Florida.

Sources:

bizjournals.com/bizjournals/news/2026/02/10/sba-covid-eidl-loan-collections-debt-treasury.html

fiscal.treasury.gov