Can Your EIDL Loan Be Forgiven? What Borrowers Need to Know

If you’re searching for EIDL loan forgiveness, here’s the short answer: EIDL loans cannot be forgiven. Unlike the Paycheck Protection Program, which was specifically designed with forgiveness in mind, the EIDL is a traditional loan that must be repaid in full.

That said, if you’re struggling to repay your EIDL loan, you do have options. In this guide, we’ll cover what borrowers need to know about EIDL repayment, what happens if you default, and what solutions are available for businesses that can’t pay.

Are EIDL Loans & Grants Forgivable?

The answer to this question varies by program. Here’s a quick breakdown:

The key distinction is between loans and grants. EIDL loans must be repaid — there is no forgiveness process and no application to submit. EIDL Advances and Targeted Advances were grants, and do not need to be repaid, provided funds were spent on approved expenses.

EIDL Advance & Targeted Advance: What You Don’t Have To Repay

If you received an EIDL Advance or Targeted EIDL Advance, the good news is that these were grants — not loans — and do not need to be repaid.

There is one caveat: grant funds had to be spent on approved expenses, including working capital, operating expenses, payroll, rent, utilities, and fixed debt payments. If funds were not spent on approved expenses, the SBA could ask for repayment.

Additionally, EIDL Advance and Targeted Advance funds are not considered taxable income at the federal level.

If you received a Supplemental Targeted Advance — an additional $5,000 grant available to businesses in low-income areas — the same rules apply. No repayment is required, provided funds were spent on approved expenses.

EIDL Loan Repayment Terms

EIDL loans are structured as traditional long-term loans with the following terms:

All deferment periods have now expired. If you received an EIDL loan in 2020, 2021, or 2022, monthly payments are currently due.

The SBA’s Hardship Accommodation Plan, which allowed reduced payments of as little as 10% of the monthly payment, expired on March 19, 2025, and no replacement program has been announced.

What If I Can’t Repay My EIDL Loan?

If you’re struggling to make payments, the most important thing you can do is act quickly and contact the SBA before your loan is referred to Treasury.

Once referred to the U.S. Treasury, a 30% collection fee is added to your outstanding balance. Plus, the government gains broad administrative collection powers that require no court order, including:

• Wage garnishment of up to 15% of disposable income
• Federal tax refund intercepts
• Social Security benefit offsets of up to 15%
• Federal vendor payment offsets

A limited hardship program may still be available on a case-by-case basis. Contact the SBA’s COVID EIDL Servicing Center at [email protected] with your loan number and a written explanation of your hardship.

If approved, you may qualify for a one-time six-month reduced payment of 50% of your regular monthly payment.

Your Options If You Can’t Repay

If you’re significantly behind on your EIDL loan, a few options exist. However, these aren’t easy, and the window to act is getting shorter.

The SBA technically accepts Offer in Compromise applications to settle debt for less than the full amount owed. But as of late 2025, no OICs for COVID EIDL have been reported as approved.

Bankruptcy — including Chapter 7, Chapter 13, and Subchapter V for businesses that want to continue operating — may be the most realistic path forward for many borrowers.

For businesses that have closed with loans over $200,000 and a personal guarantee, dissolving the business alone does not eliminate personal liability. Personal bankruptcy may be the most effective path forward.

For a full breakdown of every available option, including Treasury collection powers, default timelines, and step-by-step guidance, see our complete EIDL repayment guide.

SBA Contact Info & Resources

If you have questions about your EIDL loan or are struggling to make payments, here’s where to turn.

The Bottom Line On EIDL Loan Forgiveness

EIDL loans cannot be forgiven, but that doesn’t mean borrowers are out of options. If you received an EIDL Advance or Targeted Advance, those funds were grants and do not need to be repaid. If you received an EIDL loan and are struggling to repay it, the worst thing you can do is nothing.

Contact the SBA, review your loan status, and consult a qualified SBA or bankruptcy attorney if you’re delinquent.