Understanding the SBA Hardship Accommodation Plan for COVID EIDL Loans
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.
