COVID-19 Economic Injury Disaster Loans were a lifeline for many small business owners during the pandemic. More than 3.9 million businesses took out 30-year SBA EIDL loans at a fixed interest rate of 3.75% according to SBA data.  

Payment pauses were offered during the pandemic, allowing businesses up to 30-months to postpone making their EIDL loan payments. But those EIDL deferment periods have ended. 

Unlike Paycheck Protection Program (PPP) loans, COVID-19 EIDL program loans are not eligible for forgiveness and must be repaid. (Note that we’re talking about loans here, not grants. EIDL grants, including EIDL Targeted Grants, do not have to be repaid.) 

Some businesses are having trouble making their payments, and are required to make payments even if the business closed during the pandemic. Only loans of $200,000 or more required a personal guarantee, though. 

If you are finding it difficult to make your COVID-19 EIDL loan payments, the EIDL Hardship Accommodation Plan may be worth exploring. 

What is the EIDL Hardship Accommodation Plan?

The U.S. Small Business Administration (SBA) is offering a hardship accommodation program for businesses that can’t make their full payments. Here’s how it works: 

• Business owners must pay at least 10% of their monthly payment amount (with a $25 minimum), for six months. Larger payments are optional. 
• After the six-month hardship accommodation period ends, borrowers must make their regular payment unless they renew their hardship accommodation plan. 

This program doesn’t stop interest from accruing, which means the balance will continue to increase. The total loan repayment term is still 30 years, and borrowers who deferred their COVID EIDL loan payments could find themselves with a balloon payment at the end of the loan term. (This SBA loan payment calculator can be useful for calculating SBA loan payments.) 

Is Your Small Business Eligible for EIDL Assistance?

If you have a COVID-19 EIDL loan—and not an EIDL loan due to a natural disaster like a flood or fire—you can request hardship assistance using the steps below. Due to the large number of loans, and the generally low eligibility requirements, it’s likely the SBA will be flexible in granting hardship assistance requests. 

How Can Your Small Business Take Advantage of the EIDL Hardship Accommodation Program

You can enroll in the Hardship Accommodation Plan beginning 60 calendar days before your first payment is due. The steps you need to take depend on your loan amount: 

Loan Amounts Less than $200,000

Login to your Capital Access Financial System (CAFS) SBA loan account at MySBA Loan Portal (lending.sba.gov). Within the portal, click “Loan Summaries” in the toolbar. On the Loan Summary page, look for “Hardship Accommodation Plan” in the bottom right corner. Click “Learn more and enroll.”

Loan Amounts Above $200,000

EIDL borrowers with these larger loans (that carry a personal guarantee) should contact the COVID-19 EIDL Servicing Center at 833-853-5638 or disastercustomerservice@sba.gov (and include “Hardship Accommodation Plan” in the subject line). A loan specialist will contact you regarding requirements. 

Note the EIDL loans do not appear on credit reports, and taking advantage of this hardship program should not affect your personal or business credit. However, entrepreneurs with loans for more than $25,000 will have a UCC filing on their business credit reports. UCC filings may make it more difficult to obtain other small business loans. 

Other Alternatives If You Can’t Pay Your EIDL Loan

In addition to the hardship assistance program, consider taking advantage of the free and low-cost counseling services available through the SBA and its resource partners like SCORE or Small Business Development Centers (SBDCs). These mentors can help evaluate your business strategy and provide assistance to help your business during challenging times. Find local assistance here. 

Nav’s Verdict 

The EIDL loan program provided vital funds to business owners during the pandemic. The combination of a low interest rate and long repayment period of 30 years means many borrowers will find this one of the best small business loans available to them, especially with recent economic conditions. 

If you are still finding it hard to pay back your EIDL loan, the SBA hardship accommodation program may provide some temporary relief from unaffordable EIDL payments, but it’s a short-term solution. Interest continues to accrue, and eventually your business will need to make those payments. 

Take advantage of other free and inexpensive resources available from the SBA to help strengthen your business, including counseling and one-on-one mentoring from SBA resource partners.