If you Owe more than $30,000 contact us for a case evaluation at (833) 428-0937
contact us for a free case evaluation at (833) 428-0937
Call us (833) 428-0937

SBA COVID EIDL: New Short-Term Payment Assistance Explained

SBA COVID EIDL Loan Default? Learn about the new Short-Term Payment Assistance

Book a Consultation Call

SBA COVID EIDL: New Short-Term Payment Assistance Explained

COVID EIDL loan borrowers seeking relief from the Small Business Administration (SBA) after the Hardship Accommodation Plan (HAP) was officially closed might be eligible for the New Short-Term Payment Assistance option if experiencing temporary financial difficulties.

Below is summary of the latest update—from what changed to how COVID EIDL borrowers might still be able to secure partial relief.

Key Background: End of the Hardship Accommodation Plan

  • Hardship Accommodation Plan (HAP) Closure
        The COVID EIDL HAP, which initially allowed borrowers to pay as little as 10% of their loan payment, ended on March 19, 2025. The SBA is no longer automatically granting extended reprieves under the original HAP guidelines.
  • Reason for Change
        With changing administrative policies, the SBA discontinued blanket hardship offers. Instead, they introduced a short-term, 6-month assistance approach, focusing on verifiable temporary financial troubles rather than indefinite loan relief.

New Short-Term Payment Assistance: Key Highlights

The SBA has replaced the HAP with “short-term payment assistance” for select COVID EIDL borrowers. This program:

  1. Targets Temporary Cash Flow Challenges
        Borrowers must explain in writing how their financial difficulty is short-term (e.g., cash flow delay, short-term supply chain issue) rather than a permanent inability to repay.
  2. Provides a One-Time 6-Month Reduction
        If approved, you could potentially pay 50% of your monthly payment for six months. Note: Approval is neither guaranteed nor automatic.
  3. Maintains  Regular Interest Accrual
        While it temporarily lowers your monthly outlay, the interest on your EIDL loan continues accruing on the principal amount.

If You Are In Charged Off Status

  1. Check Loan Servicing: If your charged-off EIDL is still serviced by the SBA (not transferred to the Treasury post receipt of the Official 60-Day Pre-Referral Notice), you can:
  2. Bring the Account Current
        Log in to the MySBA Loan Portal to pay any overdue balances.
  3. Request Reinstatement and Email CovidEIDLServicing@sba.gov asking to move your loan back to current status.
  4. Submit Your Relief Application - once reinstated, you could seek the 6-month, 50% payment option—again,only if you meet the temporary-need criteria
     

Potential Next Steps & Strategies

  1. Consider the Short-Term Option
        If you never used HAP, are less than 120 days late, and can illustrate a short-term setback, apply by emailing the SBA. Provide documentation that your situation is resolvable within months.
  2. Collect Documentation: Strengthen your application with accurate cash flow projections, revenue shortfall explanations, or supplier payment schedules proving the setback is finite.
  3. Monitor Communications: The SBA may request further information on your financials. Be responsive and maintain a paper trail of every email, letter, and phone call.

FAQs: EIDL Payment Changes & Appeals

     
  • Borrowers should closely follow new SBA announcements and assess their repayment strategies. In the near term, businesses may wish to explore all financing options, consult with legal professionals, and be prepared for aggressive collection activity.
  • Q: Can I still receive a 10% payment option like the old Hardship Plan?
        No. That plan ended. The SBA now offers a one-time, 6-month payment at 50% for eligible borrowers only.
  • Q: What if the SBA denies my request?
        You can ask for reconsideration in writing, or explore Office of Hearings & Appeals Court (OHA) litigation if there’s a dispute about eligibility or other issues.
  • Q:  What if my loan already transferred to the Treasury?
        That implies an advanced default stage. You lose many of these SBA-based reprieves. Seek legal advice promptly.

Summary

With the Hardship Accommodation Plan closed, SBA short-term payment assistance is the next best route for many COVID EIDL borrowers. Eligibility hinges on temporary (not permanent)financial struggles, having no prior HAP use, and being <120 days delinquent. If you are in charged-off but still under SBA servicing,you may pay arrears and request reinstatement before applying for relief.
Embark on the journey to SBA debt relief with the SBA-Attorneys at Protect Law Group by your side. Our focused expertise in SBA debt relief can help you and your small business overcome financial hurdles and hopefully secure a stable future.
Contact us now to take the first step towards exploring your options and regain control of your financial well-being.
Disclaimer: This article provides general insights based on current SBA communications. It is not legal advice. Contact a qualified legal professional for advice tailored to your specific circumstances.

Why Hire Us to Help You with Your Treasury or SBA Debt Problems?

construction accident injury lawyer

Millions of Dollars in SBA Debts Resolved via Offer in Compromise and Negotiated Repayment Agreements without our Clients filing for Bankruptcy or Facing Home Foreclosure

slip and fall attorney

Millions of Dollars in Treasury Debts Defended Against via AWG Hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, Private Collection Agency Representation, Compromise Offers and Negotiated Repayment Agreements

truck accident injury attorney

Our Attorneys are Authorized by the Agency Practice Act to Represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.

$391,000 SBA COVID EIDL - CROSS-SERVICING DISPUTE | NEGOTIATED REINSTATEMENT & WORKOUT

$391,000 SBA COVID EIDL - CROSS-SERVICING DISPUTE | NEGOTIATED REINSTATEMENT & WORKOUT

Client's small business obtained an SBA COVID EIDL for $301,000 pledging collateral by executing the Note, Unconditional Guarantee and Security Agreement.  The business defaulted on the loan and the SBA CESC called the Note and Guarantee, accelerated the principal balance due, accrued interest and retracted the 30-year term schedule.  

The loan was transferred to the Treasury's Bureau of Fiscal Service which resulted in the statutory addition of $90,000+ in administrative fees, costs, penalties and interest with the total debt now at $391.000+. Treasury also initiated a Treasury Offset Program (TOP) levy against the client's federal contractor payments for the full amount each month - intercepting all of its revenue and pushing the business to the brink of bankruptcy.

The Firm was hired to investigate and find an alternate solution to the bankruptcy option.  After submitting formal production requests for all government records, it was discovered that the SBA failed to send the required Official 60-Day Pre-Referral Notice to the borrower and guarantor prior to referring the debt to Treasury. This procedural due process violation served as the basis to submit a Cross-Servicing Dispute to recall the debt from Treasury back to the SBA and to negotiate a reinstatement of the original 30-year maturity date, a modified workout, cessation of the TOP levy against the federal contractor payments and removal of the $90,000+ Treasury-based collection fees, interest and penalties.

$166,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

$166,000 SBA 7A LOAN - NEGOTIATED WORKOUT AGREEMENT

Clients executed personal and corporate guarantees for an SBA 7(a) loan from a Preferred Lender Provider (PLP). The borrower corporation defaulted on the loan exposing all collateral pledged by the Clients. The SBA subsequently acquired the loan balance from the PLP, including the right to collect against all guarantors. The SBA sent the Official Pre-Referral Notice to the guarantors giving them sixty (60) days to either pay the outstanding balance in full, negotiate a Repayment (Offer in Compromise (OIC) or Structured Workout (SW)), challenge their alleged guarantor liability or file a Request for Hearing (Appeals Petition) with the SBA Office of Hearings & Appeals.

Because the Clients were not financially eligible for an OIC, they opted for Structured Workout negotiations directly with the SBA before the debt was transferred to the Bureau of Fiscal Service, a division of the U.S. Department of Treasury for enforced collection.

The Firm was hired to negotiate a global Workout Agreement directly with the SBA to resolve the personal and corporate guarantees. After submitting the Structured Workout proposal, the assigned SBA Loan Specialist approved the requested terms in under ten (10) days without any lengthy back and forth negotiations.

The favorable terms of the Workout included an extended maturity at an affordable principal amount, along with a significantly reduced interest rate saving the Clients approximately $181,000 in administrative fees, penalties and interest (contract interest rate and Current Value of Funds Rate (CVFR)) as authorized by 31 U.S.C. § 3717(e) had the SBA loan been transferred to BFS.

$975,000 SBA 7A LOAN - SBA OIC CASH SETTLEMENT

$975,000 SBA 7A LOAN - SBA OIC CASH SETTLEMENT

Our firm successfully negotiated an SBA offer in compromise (SBA OIC), settling a $974,535.93 SBA loan balance for just $18,000. The offerors, personal guarantors on an SBA 7(a) loan, originally obtained financing to purchase a commercial building in Lancaster, California.

The borrower filed for bankruptcy, and the third-party lender (TPL) foreclosed on the property. Despite the loan default, the SBA pursued the offerors for repayment. Given their limited income, lack of significant assets, and approaching retirement, we presented a strong case demonstrating their financial hardship.

Through strategic negotiations, we secured a favorable SBA settlement, reducing the nearly $1 million debt to a fraction of the amount owed. This outcome allowed the offerors to resolve their liability without prolonged financial strain.

Read more Case Results

Related Content

Read more sba debt articles