In the spring of 2020 we wrote a guide to help business owners apply for the Paycheck Protection Program (PPP) and the COVID-19 Economic Injury Disaster Loan (EIDL) program.

Both programs have long since closed to new applications. But for many owners the story didn't end there: EIDL loans are now well into repayment, the government is actively collecting on delinquent loans, and pandemic-era programs remain under review. Here's where things stand.

A quick refresher: the two programs were very different

PPP loans were designed to be forgiven if the money was spent on payroll and certain other costs. Most were. Forgiven PPP loans are not taxable income for federal purposes, and the expenses paid with them are still deductible.

COVID EIDL loans were true loans, not grants. Their terms:

  • 30-year term
  • 3.75% interest for businesses (2.75% for nonprofits)
  • Collateral: loans over $25,000 are secured by a lien on business assets
  • Personal guarantee: loans over $200,000 required one

There is no forgiveness program for EIDL loans. (The separate EIDL "advances" of up to $10,000 were grants and did not need to be repaid.)

What changed for EIDL borrowers

  • Hardship relief has narrowed. SBA ended its COVID EIDL Hardship Accommodation Plan in March 2025. Payment assistance still exists in a more limited form, so contact SBA's servicing center before you fall behind, not after.
  • Delinquent loans are going to the Treasury Department. Since late 2025, SBA has been referring delinquent COVID EIDL loans to the Treasury's Bureau of the Fiscal Service for collection, and the pace picked up in 2026.
  • Referral is hard to undo. The Treasury has said that once a COVID EIDL or PPP debt is referred to it, it cannot be sent back to SBA. The debt can grow with fees once it's there.

What collection can look like

Once a debt is with the Treasury, the government can use tools a private lender doesn't have:

  • Treasury Offset Program: your federal tax refund can be taken and applied to the debt, as can certain other federal payments, including part of Social Security benefits.
  • Administrative wage garnishment without a court order.
  • Referral to the Department of Justice for lawsuits on larger balances.
  • Lien enforcement against business assets and, where there was a personal guarantee, collection against you personally.

A defaulted federal debt can also make it harder to get other federal loans or SBA financing in the future.

PPP and EIDL reviews aren't over either

  • The statute of limitations for PPP and COVID EIDL fraud is 10 years, under two laws passed in 2022. Investigations and reviews continue.
  • Keep your records. SBA requires PPP borrowers to keep their loan and forgiveness documentation for six years after forgiveness or repayment.
  • Employee Retention Credit (ERC): the 2025 tax law barred new ERC claims for the third and fourth quarters of 2021 filed after January 31, 2024, and gave the IRS six years to examine those quarters. If you claimed the ERC, particularly through a promoter, it's worth having your claim reviewed.

If you're behind on an EIDL loan

  1. Don't ignore the notices. Options shrink quickly once a loan defaults and is referred.
  2. Know where the loan is. Is it still with SBA, or has it been referred to the Treasury? The process and the people you deal with are different.
  3. Get organized. Gather the loan agreement, payment history, and current business and personal financial statements. Any workout or settlement starts with a clear financial picture.
  4. Get help. Depending on the facts, options may include a payment plan, a negotiated settlement, or for some owners, bankruptcy (where you'll also want an attorney).

As a CPA who represents clients before the IRS, I'll be candid: SBA and Treasury collections are not the same as IRS collections, and an IRS Offer in Compromise doesn't apply to these loans. But the core work is the same: documenting what you can realistically pay and dealing with the government early and in writing.

The bottom line

If you're current on your EIDL loan, keep it that way, and keep your PPP records. If you're behind, or you've received a Treasury notice, act now.