EIDL Loan Forgiveness Application Guide: Steps to Secure Your Relief

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During the COVID-19 pandemic, many businesses saw their operations get completely upended overnight. Many businesses were forced to shutter their doors as a result of lockdown measures, while others had to adjust operations to the “new normal.”

For many, it was a nightmare scenario, and one that threw their ability to stay afloat into serious question.

Luckily, the federal government provided some financial relief through loan programs designed to help weather the storm. One of those was called the Economic Injury Disaster Loan program, which offered low-interest loans to qualifying businesses.

While these loans provided much-needed relief, plenty of borrowers who took advantage of the offer are still struggling to meet their repayment schedule. So, what can you do if you’re struggling to repay?

We’ll cover some of your options below.

Introduction to COVID-19 EIDL Forgiveness

The COVID-19 EIDL program was an expansion of the EIDL program that was already in place. By declaring the entire country a designated disaster zone, the federal government was essentially making this loan program available to every business.

Both the main EIDL program as well as the EIDL Advance program — administered through the Small Business Administration (SBA) — provided loan funding that businesses could use for working capital so they could meet their ongoing financial obligations. 

Unlike loans from the Paycheck Protection Program (PPP), EIDL loans had to be repaid, although the terms were quite advantageous. That makes understanding the loan details crucial in understanding what options you have if you’re struggling to pay.

Understanding Economic Injury Disaster

The EIDL program was available to small businesses, some nonprofit organizations and small agricultural cooperatives. It was designed to help small businesses meet their necessary financial obligations that they had trouble meeting due to the disaster that was the COVID-19 pandemic.

The idea behind the program was to directly support small businesses throughout the country so they could sustain operations and staffing levels as much as possible. In this way, it would help promote economic growth.

The interest rates on EIDL loans were not to exceed 4% per year. The details of the repayment term were also determined by each individual borrower’s ability to repay.

EIDL Advance and Loan Details

The normal EIDL program offered loans that had to be repaid. However, there was also an EIDL Advance program that offered funds that were essentially a grant that didn’t need to be paid.

The SBA described these Advances as grants without the typical requirements of other U.S. government grants. While EIDL Advances don’t have to be repaid, they were only awarded to existing COVID-19 EIDL applicants who met specific criteria.

Some of the limitations of the program was that the funding had to be used only for certain business-related expenses.

Applying for an Economic Injury Disaster Loan

The SBA made the application process for an EIDL loan quite easy. Businesses could submit an application for the loan directly through the agency’s website, or they could call a representative on the phone and do so that way.

The application process took roughly seven to 10 days to complete, during which time applicants had to provide information and documentation to support their application for the loans. The SBA then reviewed that information to determine whether the applicant was eligible.

Businesses who applied for an EIDL loan could also apply for a PPP loan, since that was a separate program. Those loans could be converted into fully-forgivable grants, as long as the funding was used for specific purposes.

PPP Loan Considerations

PPP loans were so popular when they were available because they basically offered free money to small businesses. While the application process was similar to that of a loan, and while it was in essence a loan that had to be repaid, it could be converted to a fully-forgivable grant as long as the borrower met certain requirements.

The main requirement to have your PPP loan forgiven was that you used a certain percentage of the funds on specific expenses such as payroll and rent. The business also had to maintain employee wages and headcount, which is what the loan funding was for.

The SBA ultimately decided whether an applicant was eligible for a PPP loan, and whether it could be converted into a forgivable grant.

Hardship Accommodation Plan

While EIDL loans have to be repaid, the SBA did provide a special program for those who were struggling to meet the repayment schedule. It was called the Hardship Accommodation Plan (HAP), and it was designed to provide borrowers with temporary relief from loan payments.

The HAP allowed businesses to continue recovering from any economic hardship they were suffering by delaying monthly payments for a certain period of time, or reducing how much they owed for a limited time. 

The SBA worked directly with businesses to develop a plan that met their circumstances and needs.

Unfortunately, as of March 2025, the HAP program ended, removing one option for EIDL borrowers having trouble meeting their repayment schedule.

EIDL Program Updates

As with any government program, the EIDL is always subject to changes and updates, which could include new requirements and/or policy changes. Whenever this happens, the SBA provides information on the updates through its website as well as other channels.

To ensure compliance with the new requirements, businesses have to stay informed as to what’s going on.

Required Documents for Loan Forgiveness

Those who wished to apply for loan forgiveness under the HAP program were required to provide documents as proof of their ongoing economic challenges, which could include tax returns and other financial statements. The SBA then reviewed all of this information to determine whether a borrower was eligible for help under the HAP program, or total loan forgiveness under the PPP.

The SBA also provided guidance on what documents were required, so that businesses could easily prepare this information beforehand. This is important, as the SBA would only consider applications if all information was accurate, thorough and submitted in the proper fashion.

Review and Approval Process

Typically speaking, the SBA needed several weeks to complete the review process once a borrower submitted an application. Once completed, the SBA would notify the borrower directly of its final decision.

For PPP loans, if the forgiveness application were approved, the SBA would fully forgive the loan, which meant the business didn’t have to repay any of the outstanding loan. In the case of the HAP program, the SBA would modify the repayment schedule to reflect a reduction in monthly amount or a delay for a certain period of time.

If the SBA denied the application for relief or forgiveness, the borrower had the chance to appeal the decision or re-apply again in the future.

Avoiding Fraud and ID Theft

Fraud was unfortunately rampant during the pandemic, especially in the EIDL and PPP programs. That’s why it’s so important that businesses be aware of the risks of ID theft and fraud while applying.

The SBA provided a lot of guidance on how to avoid these risks, including tips for protecting business and personal information. It was also essential for businesses to work directly with only authorized SBA lenders and/or representatives.

Common Challenges and Solutions

When applying for a PPP or EIDL loan, businesses encountered common challenges such as difficulties with the process itself. The SBA did its best to provide guidance on overcoming these challenges, including tips on what documents were necessary.

If any borrower or prospective borrower needed assistance, they could always contact the SBA directly or one of the agency’s authorized lenders.

Consult with an Experienced Attorney About Economic Challenges

The EIDL program was a great way for small businesses to receive economic relief from the federal government through loans with favorable terms. These loans have to be repaid, though, which might be causing some financial trouble for businesses still struggling to recover.

With the HAP now ended, automatic temporary relief is no longer available directly through the SBA. If you took out an EIDL loan and are struggling to repay, it’s important to contact an experienced bankruptcy attorney to discuss your options.

At Babi Legal Group, we have more than 10 years of experience in business, bankruptcy, debt collection and debt settlement law, and can help you navigate the challenges associated with outstanding EIDL loans.

For more information, and a free consultation, please contact us today.

Understanding the SBA Hardship Accommodation Plan for COVID EIDL Loans

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During the COVID-19 pandemic, millions of businesses all across the country were upended due to lockdown orders and a massive alteration to how people lived. This overnight wave of change caused catastrophe for many businesses, as they were forced to find new and innovative ways to stay afloat.

Because of the sheer magnitude and significance of the pandemic, the federal government stepped in to provide financial assistance to U.S. residents and businesses through many programs.

One such program was known as the Economic Injury Disaster Loan, or EIDL. While the program is no longer available for new applicants or extra money for current applicants, it did provide many business owners with the opportunity to receive immediate financial assistance through loans that have favorable terms.

Despite the favorable terms, some borrowers still struggled repaying their EIDL loans. If you find yourself in this situation, what are your options?

We’ll discuss the options that used to exist if you were experiencing economic hardship, and what options are available to you today.

Introduction to the EIDL Hardship Accommodation Plan

The EIDL program was offered through the Small Business Administration (SBA), a federal government agency that has been providing assistance and resources to small businesses throughout the country for years. 

Knowing that the pandemic was a very unique situation, the federal government and SBA recognized that some EIDL borrowers would still have trouble repaying their loans. That’s why they created what’s known as the Hardship Accommodation Plan, or HAP.

The HAP was designed to provide borrowers temporary relief from their monthly payments, which allowed them more time to recover from any financial hardship they were still experiencing. 

As of March 19, 2025, the HAP for the COVID-19 EIDL program is no longer open and accepting new applicants. This means that borrowers who are having trouble repaying their EIDL loan have to look for other options to avoid defaulting on their loans.

Eligibility and Application

To be eligible for the HAP, borrowers had to prove that they had taken out a COVID-19 EIDL loan and that they were still experiencing financial hardship that would make repaying the loan difficult.

When making their decision as to whether to approve applicants to the HAP program, the SBA considered factors including total loan balance, the interest accrued as well as the borrower’s payment history.

The process for applying for the HAP typically required documentation and proof of financial hardship, along with a written explanation of the borrower’s financial situation.

Borrowers had the option of applying for the HAP directly through the SBA’s online portal, or they could contact the COVID-19 EIDL Customer Service Center directly.

COVID-19 EIDL Loan Details

COVID-19 EIDL loans offered very favorable terms for borrowers. They came with repayment terms as long as 30 years, and offered a fixed interest rate of only 3.75%. 

This program was designed to provide working capital to small business owners who were affected by the pandemic. They were able to use the proceeds from the loan to cover expenses such as rent, utilities and payroll.

While it sounds similar in many ways to the Paycheck Protection Program (PPP) that was also created during the pandemic, there was one major difference. EIDL loans were not forgivable and had to be repaid.

PPP loans, by contrast, could be converted into forgivable grants if the borrower used a certain percentage of the proceeds toward certain expenses.

Benefits and Features of the Accommodation Plan

The HAP program provided a lot of benefits to borrowers. First and foremost, it gave them the temporary relief they needed from monthly repayments, which allowed them to focus wholeheartedly on their operations and full recovery.

The program was one way the SBA was attempting to help borrowers avoid defaulting on their loans, which in turn would prevent them from damaging their credit score.

While interest continued to accrue during the period where borrowers didn’t have to make monthly repayments, the HAP allowed them to avoid late fees and penalties.

The HAP was only available for a limited time, though, and borrowers had to reply for assistance once that initial period expired. 

The COVID-19 EIDL Program and Its Impact

The COVID-19 EIDL program provided essential funding to small businesses throughout the country that were significantly affected by the pandemic. It provided many borrowers with working capital, which helped them to maintain staffing levels and avoid massive layoffs.

Since the EIDL program began, the SBA has approved millions of dollars in loan funding, giving a vital lifeline to many small businesses that likely would have failed without it. 

The EIDL program itself has been in existence before the pandemic, helping small businesses recover from natural disasters and other economic disruptions. But during the pandemic, the program was expanded so that all small businesses in the country — regardless of where they were located — could qualify for the program.

Next Steps for COVID-19 Economic Injury Disaster Loan Borrowers

The HAP was a valuable resource for small businesses struggling to meet their COVID-19 EIDL loan repayments. Those who have already qualified for the plan should carefully review and follow all the terms and conditions to ensure they don’t fall behind.

Now that the HAP program is no longer available, though, borrowers who are still having trouble making repayments should contact the SBA directly for additional guidance and resources. While the SBA may not be able to provide direct relief, they could provide information on other options you have.

It’s also likely a good idea to consult with an experienced bankruptcy attorney who can guide you through the other options you might have to avoid delinquency.

At Babi Legal Group, our expert attorneys have more than 10 years of experience in bankruptcy, business, debt collection and debt settlement law, and can help guide you through all of your options if you’re still struggling to repay your EIDL loan or any other loan.

For more information, or to receive a free consultation, please contact us today.

What Does SBA Consider to Forgive EIDL Loans: Key Criteria Explained

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The COVID-19 pandemic caused significant financial challenges for all types and sizes of businesses all across the country. When the pandemic broke out in March 2020, business owners saw their companies’ normal operations upended overnight.

Not surprisingly, many found themselves in very difficult financial positions, having to adjust for the new world in which we all lived. The federal government responded by stepping in to provide special and additional aid to those businesses that were affected.

The Small Business Administration (SBA) was at the forefront of much of this work, with new loan programs created and others expanded significantly. One such program was the Economic Injury Disaster Loan (EIDL).

Below, we’ll discuss what the EIDL program was and what options borrowers have if they’re struggling to repay these loans.

Introduction to EIDL Loan Forgiveness

During the height of the COVID-19 pandemic, the federal government expanded the EIDL program to provide near-term financial relief to small businesses that were affected by the dramatic financial challenges that they faced.

The EIDL program was in place before the pandemic, but it was only available to a limited number of businesses in very specific circumstances. The pandemic called for more dramatic measures, so the program was opened up to more businesses.

Unlike some of the other financial aid programs created during the pandemic — namely, the SBA’s Paycheck Protection Program (PPP) — loans taken out through the EIDL program had to be repaid.

That being said, there were ways that business owners who were still struggling to repay their loans could apply for relief. One such program was called the Hardship Accommodation Plan (HAP), which gave temporary relief from repayments to any borrowers who were still experiencing financial hardship.

The SBA considered many different factors when determining whether a borrower was eligible for loan assistance or forgiveness, including the borrower’s ability to repay the loan.

Unfortunately, the HAP program ended on March 19, 2025. Borrowers who are still experiencing trouble repaying an EIDL loan, though, can reach out directly to the SBA to figure out other options.

EIDL Program Overview

The COVID-19 EIDL program was established to help small businesses by providing them extra financing options if they were impacted by the pandemic. There were two types of funding that businesses could qualify for.

The first was the main part of the EIDL loan program, which allowed for funds to be used toward working capital and other regular operating expenses. While the loans were not forgivable and had to be repaid, they did offer very favorable terms, including low interest rates and a repayment period of as long as 30 years.

The SBA also offered the EIDL Advance program, which was available to borrowers who already applied for a COVID-19 EIDL loan and met other criteria. These Advances were like grants, but they didn’t have the typical requirements that U.S. government grants have. 

The EIDL Advances didn’t have to be repaid.

In addition to these direct loan programs, the SBA also offers ongoing resource partners, who can provide support and guidance to small business owners.

COVID-19 Economic Injury and Eligibility

In order to be eligible for the EIDL loan program, a small business had to be located within a declared disaster area. During the pandemic, though, the SBA expanded that definition and declared that the entire country was in such an area.

That meant that all small businesses initially met that criteria. From there, the SBA used a number of different factors to determine eligibility — namely, that the small business was experiencing economic injury because of the pandemic.

To make that determination, the SBA considered factors including increased expenses, reduced demand from customers and decline in revenue, among other things.

The SBA provided in-depth eligibility criteria on its website and other materials, and officials with the government agency are always available to answer more in-depth questions.

COVID-19 Economic Injury Disaster Loan Forgiveness

As mentioned, the SBA didn’t offer loan forgiveness for the EIDL program, unlike the PPP. That being said, the HAP was available to provide borrowers with temporary relief from their regularly monthly loan repayments.

Any borrower could enroll in the HAP to reduce their loan repayments all the way down to only 10% of the original amount. This program was available for six months, and after that time, the borrower had to continue making their regular monthly payments.

To be eligible for this plan, the borrower couldn’t be in a charged-off status, and they also had to provide a written explanation of what their temporary financial hardship was.

The SBA would then review these applications on a case-by-case basis to determine whether the borrower was eligible for the plan.

Again, though, the HAP program ended in the first quarter of 2025, removing that financial relief option for borrowers.

COVID EIDL Loans and Borrowers

While the COVID-19 EIDL loan program stopped accepting applications for new loans or advances at the start of 2022 — and stopped processing loan increase requests by May of that year — there are still resources available for borrowers who took out a loan under the program.

Those who are still repaying a loan but need assistance can contact the SBA’s EIDL Customer Service team directly to request assistance or guidance with their loan. While the HAP program is no longer available, the agency still does offer a lot of guidance and resources to help small businesses manage loan payments or navigate any other challenges.

The SBA’s online portal for the EIDL program is still open, and this provides information about loan balances and the ability to repay them online.

COVID-19 EIDL Program Resources

The SBA’s main purpose as a government agency is to help small businesses succeed. They do these in various ways, not just limited to the EIDL program or other financial assistance programs.

At the agency’s website, they provide free resources for small businesses, including FAQs, webinars and tutorials. Small business owners who wish to have further help can contact the SBA’s resource partners to get more hands-on support and guidance.

Consult with an Experienced Attorney if You’re Having Trouble Repaying EIDL Loan

The COVID-19 EIDL program provided additional resources and financial assistance to small business owners experiencing significant challenges during the pandemic. While the loans had to be repaid, unlike PPP loans, they offered very favorable terms and conditions.

The SBA no longer offers the HAP program, which provided temporary financial assistance to borrowers having trouble repaying their loans. That being said, there are still resources and options available for those who need help, such as bankruptcy relief, which will provide for a discharge of the EIDL loan obligation.

If you’re having trouble repaying your EIDL loan, it’s best to consult with an experienced bankruptcy attorney so you can avoid negative consequences.

At Babi Legal Group, we have more than 15 years of experience in business, bankruptcy, debt collection and debt settlement law. Our dedicated attorneys can help you navigate your financial situation so that you avoid more disastrous outcomes.

For more information and a free consultation, please contact us today.