Can you Discharge an EIDL Loan in Franklin County Ohio?

An EIDL Loan is an Economic Injury Disaster Loan. EIDL loans were loans given by the Small Business Association to small business owners trying to stay in business during Covid. EIDL Loans are different from the PPP loans (Paycheck Protection Program). PPP loans were forgiven if the borrower met certain provisions. An EIDL Loan is a 30 year loan with a 3.75% interest rate, which is not forgiven in Franklin County, Ohio.

How do EIDL Loans work in Franklin County?

An EIDL loan is given to an eligible business owner and must be used for the business, including payroll, rent and other financial obligations. The payment on these loans is deferred for 30 months after taking the loan.

Do I have Personal Liability for an EIDL Loan in Franklin County?

For EIDL loans less than $25,000, the SBA did not require personal liability. The loan is only in the business name. You can get rid of this type of loan by simply closing your business.

For an EIDL Loan between $25,000 – $200,000, there is no personal guarantee required from the business owner. However, the SBA will require that a UCC lien be placed on the business assets. This means that, if you are unable to pay your EIDL loan when payments come due after 30 months, you may lose assets from your business to be used to help pay the loan. Closing your Franklin County business and surrendering business assets to the SBA will wipe out this loan.

For EIDL loans over $200,000, the SBA does require personal liability. In this situation, a borrower is liable for the business debt incurred. If the EIDL Loan becomes delinquent, your personal assets could be liquidated to help pay. If you have obtained employment with W-2 wages, then your wages can be garnished as well. Additionally, the SBA does not have to file a lawsuit to garnish your wages (neither does the IRS).

Generally, for loans over $500,000, the SBA will use your personal home as collateral. In this event, if your loan defaults, then you could lose your house to foreclosure.

Are EIDL Loans Dischargeable in Bankruptcy in Franklin County?

EIDL Loans under $25,000 are considered unsecured loans and would be dischargeable in a chapter 7 or Chapter 13 bankruptcy in Franklin County. However the easiest thing for loans of this size would be to close the business. For loans between 25,000 and 200,000, the loan can be erased by closing the business and surrendering ay business collateral.

For loans over $200,000, it is possible to discharge the EIDL Loan. You can file a personal bankruptcy and discharge your liability on this debt. However, if the SBA has taken your house as collateral for the loan, you run the risk of losing your house in a bankruptcy. A qualified attorney can review this situation and advise you accordingly.