SBA EIDL Loan Updates: What You Need to Know!

As of March 2025, the Small Business Administration (SBA) has implemented significant changes to its Economic Injury Disaster Loan (EIDL) program, affecting many small business owners. Here's an overview of the latest developments:​

No Plans for EIDL Loan Forgiveness

Despite ongoing discussions, the SBA has not announced any plans to forgive outstanding EIDL loans. The substantial financial implications of forgiving these loans make such a move unlikely in the near future. ​National Business Capital

Resumption of Loan Collections

The SBA has reinstated its loan collection programs to address rising delinquencies and defaults. This includes enhancing oversight of non-bank lenders and revising underwriting standards to protect the solvency of loan programs like 7(a). ​Small Business Administration+2The Business Journals+2DISTRESSED LOAN ADVISORS+2Small Business Administration+1The Business Journals+1

Hardship Accommodation Program

The SBA's Hardship Accommodation Program has provided temporary relief to borrowers facing financial challenges.However, as these accommodations expire, borrowers may need to resume full payments, potentially leading to increased defaults. The SBA is expected to introduce additional relief options, but details remain uncertain. ​Reddit+4DISTRESSED LOAN ADVISORS+4The Business Journals+4Home | U.S. Senator Joni Ernst of Iowa

Asset Sales Require SBA Approval

Business owners considering selling assets must obtain prior approval from the SBA. Selling assets without authorization can be deemed fraudulent conveyance, leading to severe consequences, including investigations by the Inspector General. ​Small Business Administration+2DISTRESSED LOAN ADVISORS+2DISTRESSED LOAN ADVISORS+2

Personal Guarantees and Liability

Understanding personal liability is crucial:

• Loans Over $200,000: Require a personal guarantee.​DISTRESSED LOAN ADVISORS+1YouTube+1
• Loans Under $200,000: Do not require a personal guarantee unless the borrower is a sole proprietor.​DISTRESSED LOAN ADVISORS
• LLCs, S Corps, and C Corps: Loans under $200,000 taken out under a business entity typically do not involve personal liability.​DISTRESSED LOAN ADVISORS

Borrowers uncertain about their liability should consult their loan agreements or seek professional advice. ​DISTRESSED LOAN ADVISORS

Future Outlook

With the new administration under President Trump, the SBA is expected to adopt a more aggressive stance on loan collections. This includes restarting dormant collections programs and conducting comprehensive financial audits to address mismanagement and preserve the solvency of loan programs. ​Home | U.S. Senator Joni Ernst of Iowa+2Small Business Administration+2The Business Journals+2

Conclusion

Small business owners with EIDL loans should stay informed about these changes and proactively manage their loan obligations. Consulting with financial advisors or legal professionals can provide tailored guidance to navigate this evolving landscape.​ Connect with me today. 

Written by Darlene M. Ziebell