Is There a Deadline for Including EIDL Loans in Business Reorganization Bankruptcies?
It has now been more than six years since the start of the COVID-19 pandemic in the United States, and more than six years since many businesses in South Florida began shutting down due to pandemic health and safety issues. During that difficult time, and in the months and early years to follow, many businesses in Florida and throughout the country did not have an option for paying employees while customer and client numbers were significantly down or nonexistent. In response, the US Small Business Administration (SBA) made loans available to small businesses through the Economic Injury Disaster Loan (EIDL) program.
If your business is having difficulty repaying an EIDL loan it borrowed a number of years ago, is it still possible to restructure the debt associated with that loan in a business reorganization bankruptcy? In short, the answer is likely yes. Our bankruptcy lawyers in South Florida can explain in more detail.
Understanding How the EIDL Loan Program Worked
Through the SBA’s EIDL program, businesses could obtain a loan — for anywhere from a small amount of money less than $25,000 to up to $2 million. New EIDL loan requests were accepted up through January 1, 2022, and requests for loan increases were accepted up through May 6, 2022. Collateral was required for loans of more than $25,000, and a personal guaranty was required for loans of more than $200,000, meaning that individual business owners could be personally liable for EIDL loans borrowed by their businesses.
The loan term for most EIDL loans was 30 years, with payments deferred for the first two years. What that meant was that most businesses did not need to start repaying officially until 2024. Yet even then, a hardship program was introduced for businesses that were having difficulty meeting the payment requirements. As such, many businesses received additional deferments. In 2025, however, the hardship program ended.
Business Reorganization Bankruptcy and Your Company’s EIDL Loan
Even though your business might have borrowed its EIDL loan as early as 2020, you can still include this loan — with current loan terms — in a business reorganization bankruptcy.
Depending on the details of your business and the type of bankruptcy you are filing, it may be possible to restructure your EIDL loan debt or, in some circumstances, to have some of the debt discharged. It is important to know, however, that any EIDL loan amount with a personal guaranty cannot be discharged in full or in part — the party who provided the personal guaranty would become liable for the debt. If your business has an EIDL loan with a personal guaranty, you should discuss reorganization bankruptcy options with an attorney who can help you to reorganize this debt and to repay it in full over time.
Contact a West Palm Beach Bankruptcy Attorney Today for Assistance with Your Company’s EIDL Loan
Businesses throughout South Florida are struggling to repay EIDL loans from the COVID-19 pandemic, as well as certain types of SBA loans. If your business could benefit from restructuring its debt while remaining open, you should seek legal advice about a type of reorganization bankruptcy. Your business could be eligible for Chapter 11 bankruptcy, Subchapter V bankruptcy, or another type of bankruptcy through which your company could reorganize its debt and catch up on payments owed to creditors, all while remaining open for customers and clients. One of the experienced West Palm Beach bankruptcy lawyers at Kelley Kaplan Delaney & Eller, PLLC can discuss your options with you today. Contact us for more information about how our firm can assist you.
Sources:
law.cornell.edu/uscode/text/11
sba.gov/funding-programs/disaster-assistance/economic-injury-disaster-loans
