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Are EIDL Loans Forgivable? Rules and Guidelines

Are EIDL Loans Forgivable? Rules and Guidelines; Will economic injury disaster loans (EIDL) be forgiven? Learn more from Lantern by SoFi.
Susan Guillory
Susan GuilloryUpdated January 3, 2024
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
If you were one of the thousands of small business owners who received an Economic Injury Disaster Loan (EIDL) because of the COVID-19 pandemic, you may have heard some rumors that are making you wonder whether Small Business Administration’s EIDL loans are forgivable.The short answer is that EIDL loans themselves are not forgivable. On its website, SBA says, “The 30-month COVID-19 EIDL deferment period will not be extended. COVID-19 EIDL is not forgivable.”However,  there are two Supplemental Advances that may have been forgivable at one time.Here’s a breakdown of what you need to know about EIDL loan forgiveness by funding type.

What Loans Are Available?

The EIDL program for Covid-19 assistance is finished. The SBA is no longer accepting new applications for COVID-19 Economic Injury Disaster Loans, reconsidering denied requests, or increasing requests. The portal for applications was removed from the SBA site in spring 2022.Also finished is the Paycheck Protection Program (PPP), which provided loans to business owners to keep employees working when businesses either experienced slowed sales or had to shut down entirely. That program ended May 31, 2021.There is still an active EIDL program for businesses that have been hit by natural disasters. If businesses have suffered substantial economic injury and are one of the following types of businesses located in a declared disaster area, they may be eligible for an SBA EIDL: Small business, small agricultural cooperative, or a private nonprofit organization.Now, let’s go back to the question of whether EIDL loans are forgivable.

Which Loans Are Forgivable? 

The SBA’s EIDL for recovery from a natural disaster is not a forgivable loan. The Covid-oriented EIDL and the PPP may have been forgivable in part. That means that you don’t have to pay them back as long as you meet certain requirements. But there were strict rules about what kinds of loans were eligible for forgiveness and what you had to do to qualify.
Loan TypePermitted Use of FundsHow to Get Loan Forgiven
EIDLWorking capital and normal operating expenses like: healthcare benefits, rent, utilities, fixed debt payments.Targeted EIDL Advance (up to $10k forgiven): In low-income community Had more than 30% reduction in revenue because of COVID-19 Have 300 or fewer employees Supplemental Targeted Advance (up to $5,000 additional forgiven): In low-income community Had more than 50% reduction in revenue because of COVID-19 Have 10 or fewer employees

EIDL Loan Forgiveness Rules

As you can see from the chart above, there were two opportunities business owners had to get all or part of their EIDL debts forgiven: the Targeted EIDL Advance and the Supplemental Targeted Advance. Let’s go over the EIDL loan forgiveness rules for both.To be forgiven for the loan, your business must have done the following. 
  • Be in a low-income community
  • Have had more than 30% reduction in revenue because of COVID-19
  • Have 300 or fewer employees 

Supplemental targeted advance

To qualify for forgiveness here your business must have done the following.
  • Be in a low-income community
  • Had experienced more than a 50% reduction in revenue because of COVID-19
  • Have 10 or fewer employees
According to the SBA’s website, all Advances have been allocated and none further will be given.

How Much of the EIDL Loan Was Forgivable?

While there isn’t technically EIDL loan forgiveness, there was EIDL Advance forgiveness in the past, and there was a cap on this. You could not have more than $15,000 forgiven across both the Targeted EIDL Advance and the Supplemental Targeted EIDL Advance. The Targeted EIDL Advance provided up to $10,000 in forgivable funds, and the Supplemental Targeted Advance up to $5,000. The total between the two cannot exceed $15,000.You may receive additional funds with an EIDL loan that cannot be forgiven. It’s important to be aware of this, because in this case your loan will have interest and payments due, and missing one or more of these payments could put your credit at risk.

The Takeaway

So, ultimately, the question of whether EIDL loans will be forgiven has a pretty simple answer. EIDL loans themselves must be repaid, but Targeted EIDL Advances were potentially forgivable. Those Covid-oriented loans no longer exist.If you need more funds than the EIDL provides, consider applying for a small business loan online at Lantern by SoFi and get a  small business loan offer from lenders in our network.

Frequently Asked Questions

Which EIDL loans are forgivable?
Will all or part of my loans be forgiven?
How much of the EIDL loan is forgivable?

About the Author

Susan Guillory

Susan Guillory

Su Guillory is a freelance business writer and expat coach. She’s written several business books and has been published on sites including Forbes, AllBusiness, and SoFi. She writes about business and personal credit, financial strategies, loans, and credit cards.
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