The COVID-19 pandemic has greatly impacted small businesses in the United States. Many have struggled to stay afloat, resulting in high demand for financial assistance. The U.S. Small Business Administration (SBA) offered Economic Injury Disaster Loans (EIDL) to small businesses affected by COVID-19 during the economic shutdowns associated with the pandemic. Business owners must repay these loans, but if you believe your financial situation has continued to deteriorate, you may have options.
What Happens if You Can’t Afford to Repay a Covid SBA EIDL?
It’s important to note that SBA EIDL loans are administered and serviced by the U.S. Small Business Administration. The Government has strict rules about these loans, which can vary based on the amount of the loan and the type of business. Therefore, it's important to understand the specific terms of your loan. If your SBA EIDL loan has gone into repayment and you're struggling to make the payments, you should contact the SBA office for an in-depth review of your situation and further advice as to your options. While you may be tempted to ignore the situation or delay payments, this can lead to significant penalties and even defaulting on your loan.
Steps to Take if You're Struggling to Repay Your EIDL Loan
It's important to speak with a representative from the SBA and explore your options. Depending on your situation, various options may be available, such as a loan modification, deferment of payments, or even loan forgiveness.
Here is a detailed bullet point list explaining steps you should take if you're struggling to repay an EIDL loan:
- Contact the SBA office: It's important to contact the SBA office and explain your situation. They can offer information about your loan and help you explore your options.
- Review your loan: Take the time to review the terms of your loan, including the interest rate and repayment schedule. This will help you understand your financial obligations and identify any areas where changes may be needed.
- Consider loan modification: Depending on your situation, you may be able to modify your loan to make it more affordable. This may involve extending the loan term, reducing the interest rate, or changing the repayment schedule.
- Explore deferment options: If you're struggling to make payments, you may be eligible for a deferment. This allows you to temporarily stop your payments without defaulting on your loan.
- Look into loan forgiveness: You may be eligible for loan forgiveness depending on your situation. Qualifying for a loan forgiveness program means you won't have to repay part or all of your loan.
- Seek other financial assistance: In addition to SBA loans, other financial assistance may be available. For example, you may qualify for a grant, low-interest loan, or other small business initiatives available through your SBA office.
- Create a budget: Create a budget that considers your EIDL loan payments and other financial obligations. This can help you identify areas where you can cut expenses and free up more funds for loan payments.
- Stay in contact with the SBA: Keep the SBA updated on your situation and any actions you take. This can help ensure that you stay in compliance with the terms of your loan and avoid penalties.
If you took out an SBA EIDL loan but have since faced financial hardship due to a business closure, there are different reporting requirements for closed businesses. Contact your local SBA office and review what options are available for your situation.
Contact the Attorneys at LaRese Law to Discuss Options for Your EIDL Loan Repayment
If you're struggling with the repayment of your SBA EIDL loan, don’t let your loan payments become overwhelming - reach out to the SBA for support. It's important to act fast. Start by seeking guidance from an SBA representative or attorney. Many options are available, like loan modification, deferment, forgiveness, or financial assistance. Ultimately, your COVID SBA EIDL loan is your responsibility, and it's important to take prompt action as soon as you begin experiencing financial distress. Call LaRese Law today at (203) 774-3332 to schedule a consultation with one of our attorneys. We may have options to help you through these difficult times.