Is EIDL Loan Forgiveness a Thing?

When the COVID-19 pandemic hit the US, the government stepped in with emergency loans to help business owners stay open. One of the most popular programs was the Economic Injury Disaster Loan (EIDL). These loans were easy to get, had low interest rates, and gave businesses much-needed cash during a tough time.

Fast forward to now, and many business owners are still trying to recover — and a big question keeps coming up:

Do I have to pay this loan back? Or is EIDL loan forgiveness a thing?

Let’s clear up the confusion and talk about what you can (and can’t) do if you're struggling to repay your EIDL loan.

Can You Get Your EIDL Loan Forgiven?

No — EIDL loans are not forgivable.

Even if you used the funds exactly how the SBA said you should — like covering payroll, rent, or bills — you still have to pay the money back.

This is different from PPP loans, which were designed to be forgiven if you followed certain rules. EIDL loans were never forgivable and are treated like regular loans, with a 30-year term and 3.75% interest for businesses.

What If You Can’t Pay It Back?

If you're having a hard time making payments, you're not alone. Here's what could happen if you stop paying:

• The SBA may send your loan to the U.S. Treasury Department for collection.

• The Treasury can add penalties and extra interest, making your balance grow by up to 30% or more.

• They can take your tax refund, garnish your wages, or even take part of your Social Security.

• In rare cases, if they think you lied on your loan application or used the money the wrong way, they could look into fraud.

That’s the bad news. But the good news is, you still have options.

Can You Settle or Negotiate an EIDL Loan?

Sadly, no. EIDL loans can’t be reduced or settled through an “Offer in Compromise” like some other SBA loans (like the 7a loan).

Once the loan is in collections, the Treasury handles it — and they don’t have a process to settle it for less than you owe.

But that doesn’t mean you’re out of luck. Depending on your situation, you may be able to limit the damage, stop collections, or avoid personal risk.

What Should You Do Next?

1. Know Your Loan Type

Your risk depends a lot on how much you borrowed:

• Under $25,000: Likely unsecured with no personal guarantee. Less risk.

• $25,000 to $200,000: Secured by business assets but usually no personal guarantee.

• Over $200,000: Probably has a personal guarantee — this means the SBA can try to collect from you personally.

2. Don’t Ignore It

This is the biggest mistake we see. If you wait too long, penalties pile up and your options shrink fast. If you're struggling, it’s better to take action now — even if you're not sure what that looks like yet.

3. Get Expert Help

At EIDLexit, we help business owners like you figure out the smartest way to deal with EIDL debt. We explain your options, look at your risks, and help you build a plan that protects your future.

Bottom Line

There’s no forgiveness program for EIDL loans — but that doesn’t mean you have to deal with this alone. The sooner you understand your options, the sooner you can stop worrying and start moving forward.

We’re here to help.

EJ Simonsen is the co-founder of EIDLexit. Before launching the company, he spent years managing a law firm that focused on business debt relief. He’s helped hundreds of business owners across the country understand their SBA loan obligations and protect themselves from aggressive collections. EJ believes every small business owner deserves clear answers and a chance to start fresh.