SBA Intensifies Collection Efforts on Delinquent COVID-Era Business Loans

The U.S. Small Business Administration (SBA) has intensified collection efforts on delinquent loans issued through its COVID-era Economic Injury Disaster Loan (EIDL) program, increasing pressure on borrowers who have fallen behind on repayments.

The U.S. Small Business Administration is pursuing delinquent Economic Injury Disaster Loans issued to businesses during the COVID-19 pandemic. [Photo: U.S. Small Business Administration Facebook]

The program provided financial assistance to businesses affected by the economic disruption caused by the COVID-19 pandemic.

Between March 2020 and May 2022, the SBA approved more than 3.9 million COVID EIDL loans totaling approximately $378.4 billion.

The loans were intended to help businesses cover operating expenses and manage financial difficulties during the pandemic. However, a significant portion of the lending portfolio has since become a collection challenge as borrowers struggle to repay their obligations.

The SBA's collection policies include referrals of delinquent accounts to the U.S. Department of the Treasury for further action.

Depending on the circumstances and applicable rules, federal collection procedures may include administrative offsets and other measures.

The policy shift toward referring certain delinquent loans to Treasury began before the current administration. The SBA's collection efforts therefore should be viewed in the context of policy changes and loan-recovery procedures that developed over several years.

The total amount originally approved under the program should not be confused with the amount currently outstanding or delinquent. Loan balances, repayments, defaults and charge-offs affect the amount still owed.