Pandemic EIDL Loans Are Leading to More Business Bankruptcies
Did your South Florida business borrow a COVID-19 Economic Injury Disaster Loan (EIDL) through the federal government? At the time you borrowed the loan, it may have seemed like the best option for keeping your business running through the pandemic shut-downs and to ensure that your business would be able to recover financially from the economic downturn associated with the pandemic. However, you may now be finding yourself in the situation that thousands of small business owners are finding themselves in: your EIDL loan has become due, and the terms are such that your business is having trouble repaying.
According to a recent report from Bloomberg, EIDL loans were provided to almost 4 million small business owners in the United States during the pandemic for a collective total of around $380 billion. Many of those EIDL loans also came with personal guarantees, meaning that small business owners would be personally liable for the amounts borrowed if the businesses could not repay. Now that those loans are leading thousands of businesses to file for bankruptcy.
Bankruptcy Filings Linked to EIDL Loans Increase
The Bloomberg report suggests that a recent “surge” in business bankruptcy filings is linked at least in part to EIDL loans. And that rise in corporate bankruptcy filings, the article reports, “comes in tandem with a growing number of consumer bankruptcies by owners who have become personally liable for those debts when the businesses fail.” In other words, businesses with EIDL loans are filing for bankruptcy at higher rates, and shuttered businesses that received EIDL loans through personal guarantees of the owners are also tangentially linked to a rise in individual filings as those bankruptcy owners are also seeking bankruptcy protection.
Recent data suggests that about 1,800 businesses with EIDL loans have filed for bankruptcy as of September 2025 and listed the US Small Business Administration (SBA), which administers EIDL loans, as “a major creditor.” That number, according to Bloomberg, “surpasses figures for each of the last five calendar years.”
Filing for Business Bankruptcy with an EIDL Loan
Is your business among the thousands struggling to repay EIDL loans? If so, you should consider the possibility of bankruptcy. Depending on your business’s financial circumstances, you could be eligible for different types of reorganization bankruptcy that would allow you to continue running your business while restructuring the debt you owe to the SBA.
For most businesses seeking reorganization bankruptcy with an EIDL loan, you will want to talk with a bankruptcy attorney about Subchapter V or Chapter 11 bankruptcy.
Contact Our West Palm Beach Bankruptcy Attorney Today for Assistance
If your business is currently struggling to repay a pandemic-era loan, your business may want to consider a reorganization bankruptcy. Through a Chapter 11 or Subchapter V filing, you may be able to repay the pandemic loan over time in a manner that is feasible for your business given its current financial circumstances. With a reorganization bankruptcy, you can also continue to run your business and to serve your customers and clients without the pressure of the current terms of your pandemic loan. One of the experienced West Palm Beach bankruptcy lawyers at Kelley Kaplan Delaney & Eller, PLLC can speak with you today about your business’s financial circumstances and the details of your pandemic-era loan, and we can help you to move forward with a reorganization bankruptcy. Contact us today for assistance.
Sources:
news.bloomberglaw.com/bankruptcy-law/covid-loans-that-boosted-businesses-now-push-them-to-bankruptcy
sba.gov/funding-programs/loans/covid-19-relief-options/eidl
