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

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.