How EIDL Loans Are “Haunting” Small Businesses
Is your South Florida business currently struggling to repay the pandemic loan it borrowed through the Small Business Administration’s Economic Injury Disaster Loan (EIDL) program? If so, your business is among the millions of others in Florida and across the country in a similar situation. According to a recent article in The New York Times, EIDL loan debt is “haunting” small businesses in America and is putting them at risk of closure if they do not find a way to manage the debt. For many of these businesses, a reorganization bankruptcy could be the solution.
Our West Palm Beach bankruptcy attorneys can tell you more about the current status of EIDL loan debt and collections, and we can speak with you today about your business’s reorganization bankruptcy options.
EIDL Loans Initially Looked Like a Promising Form of Relief During the Pandemic
As the article discusses, for small businesses throughout the country, the EIDL loan program was a lifeline and seemed to be a promising form of relief as businesses were struggling with COVID-19 downturns beginning in 2020. Many businesses began by borrowing relatively small amounts — under $50,000 or under $100,000 — but as pandemic financial difficulties grew, many of those small businesses borrowed larger amounts that required personal guarantees, some borrowing up to $500,000 or more. While EIDL loans offered seemingly viable repayment over 30 years and with low interest rates, increased borrowing and rising costs have made it difficult and sometimes impossible for small businesses to repay what they owe.
According to The New York Times, a high percentage of business owners have not made any progress on repaying their EIDL loans since they became due, and with inflation and other increased costs, many of those business owners are also behind on payments.
Treasury Collections After 90 Days of Delinquency
In total, the Small Business Administration (SBA) sent about $378 billion in EIDL loans to small business borrowers between 2020 and 2022. Yet the SBA has barely recouped any of that amount. As of 2023, according to the article, “small businesses with outstanding loans from the program were less likely to be profitable than those without them.” In other words, many businesses with EIDL loans are behind on their payments, and some are in default.
After 90 days of delinquency, the Treasury Department begins collection actions. Currently, $75 billion is now in collections. More could end up in collections in the near future. Businesses in this situation may be able to get back on track with a reorganization bankruptcy, and an attorney at Kelley Kaplan Delaney & Eller, PLLC can help.
Contact a West Palm Beach Bankruptcy Attorney for Assistance with Your Business’s EIDL Loan and Bankruptcy Options
If your South Florida business is struggling to repay the EIDL loan you borrowed during the pandemic, it is important to know that your business certainly is not alone and that there are options for managing your debt. As we discussed above, you may be eligible to file for a type of business reorganization bankruptcy that can allow you to keep your business fully open and operational while also restructuring your business’s debt. To find out more about this option, you should get in touch with one of the experienced West Palm Beach bankruptcy lawyers at Kelley Kaplan Delaney & Eller, PLLC. Contact our firm today to learn more about the bankruptcy assistance and services we provide to businesses throughout South Florida.
Source:
nytimes.com/2026/03/24/business/economy/sba-pandemic-loan-defaults.html
