You Closed the Business and Took a Job. Now the SBA Wants Its Money
Quick Answer If your debts are primarily business debts rather than consumer debts, the Chapter 7 means test does not apply to you at all. That means a former business owner earning a good salary can often file Chapter 7 and discharge a personally guaranteed EIDL in three to four months, even at an income […]
The SBA’s Lien on Your Business Assets: What It Covers and What Survives Bankruptcy
Quick Answer COVID EIDLs over $25,000 generally required collateral, taken as a blanket security interest in business personal property and recorded with a UCC-1 financing statement. A bankruptcy discharge eliminates your personal obligation to pay but does not remove that lien. The lien stays attached to the collateral, which matters enormously if the business still […]
SBA Offer in Compromise vs. Bankruptcy for EIDL Debt: How to Choose
Quick Answer An Offer in Compromise is a request that the SBA accept less than the full balance. The agency still accepts the paperwork for COVID EIDLs, but its own Offer in Compromise form states these loans cannot be forgiven, eligibility requires that the business be permanently closed with all collateral liquidated, and confirmed approvals […]
Who Is Personally Liable for an EIDL? The $200,000 Line That Changes Everything
Quick Answer For COVID EIDLs, the SBA generally did not require a personal guaranty at or below $200,000, and generally did require one above that figure. If you borrowed through a corporation or LLC and did not sign a guaranty, the debt is the entity’s and your personal assets are not exposed. If you borrowed […]
The SBA Sent My EIDL to Treasury: What They Can Take and What You Can Still Do
Quick Answer Once your EIDL is referred to Treasury’s Cross-Servicing program, a substantial collection fee is added to your balance and the government can garnish up to 15 percent of your disposable pay, intercept your tax refunds, and offset Social Security benefits without ever going to court. Treasury generally cannot send the debt back to […]
Can Bankruptcy Discharge an EIDL Loan?
Quick Answer Yes, in most cases. Nothing in the Bankruptcy Code exempts SBA or COVID EIDL debt from discharge, so an EIDL taken in good faith is treated like any other unsecured business debt. Three things determine your actual outcome: who is legally liable for the loan, whether the SBA holds a lien, and whether […]
SBA Loan Debt and Bankruptcy: EIDL & PPP Guide for Business Owners
SBA Loan Debt and Bankruptcy: A Guide for Struggling Business Owners If your small business took on debt through the Small Business Administration (SBA) during the COVID-19 pandemic, you are not alone, and you are not out of options. Between 2020 and 2022, the SBA issued approximately 3.9 million COVID-19 Economic Injury Disaster Loans (EIDL) […]