Small Business Administration Implements 60-Day Goodwill Exception For PPP, EIDL Loans

The Small Business Administration (SBA) is giving entrepreneurs a 60-day goodwill grace period to pay back COVID-19 PPP and EIDL loans under $100,000.

The Small Business Administration (SBA) is giving entrepreneurs who took Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loans (EIDL) a break on paying them back.

According to an SBA press release, the agency has implemented a 60-day goodwill grace period under which the agency will not send delinquent loans to the IRS or Treasury Department for collections to entrepreneurs who borrowed less than $100,000 from the programs.

Additionally, the SBA will use the 60 days to assist PPP borrowers with applying for loan forgiveness and ensure that EIDL borrowers are informed of all repayment options, including hardship repayment opportunities.

“Small business borrowers in delinquency or default who take action and obtain good standing with the SBA will improve their long-term financial health substantially,” the agency said in the release. “The benefits of getting, and staying, current on SBA loans include better credit scores, which make it cheaper and easier to buy a home or car in the future; eligibility for future government financial assistance, like a VA loan or help after a natural disaster; and, in some cases, avoidance of federal and private collections activities which can include withholding tax returns and wage garnishment.”

If borrowers are unsure if their loan has been forgiven, they can log into the MySBA loan portal, where borrowers can see all of their SBA loans, including PPP loans, and the status of each loan. For PPP loans, the status will show “paid in full” if the PPP loan has been forgiven. The agency’s website also provides information on how to apply for forgiveness, which borrowers should do immediately if they have not already.

The Business Journals reports the SBA approved around 3.9 million COVID EIDL loans totaling $378 billion before the program ended in May 2022. EIDL loans carry a 3.765% interest rate and a 30-year term as well as provisions including that business owners must start making payments two years after the loans were distributed. The SBA added a six-month deferment period, extending it to 30 months.

For business owners who can’t make the payments, applying for the SBA Hardship Accommodation Plan will reduce a borrower’s payment to 10% of their monthly payment for six months, and borrowers can apply for up to four six-month hardship extensions if necessary.

Earlier this month, the Biden administration announced it would begin pursuing business loans that were distributed during the COVID-19 pandemic after initially announcing that the federal government would not pursue small businesses that had withdrawn funds under the COVID-19 Economic Injury Disaster Loan program.