A few years ago, the idea of federal debt forgiveness took center stage with the proposal to cancel student loan debt. That proposal ignited passionate debate across the country. But there’s another category of debt that rarely gets the same attention, even though it affects millions of small businesses: COVID‑19 Economic Injury Disaster Loans, better known as EIDLs.
These loans were designed as a lifeline for small businesses during the pandemic, providing up to $2 million with low interest and long repayment terms to help cover operating expenses when revenue disappeared. The Small Business Administration (SBA) approved more than 4 million EIDLs totaling approximately $380 billion, giving struggling businesses crucial working capital when they needed it most.
Unlike the Paycheck Protection Program (PPP), which was forgiven for most borrowers, EIDL loans are not eligible for broad forgiveness under current law. The SBA website clearly states that borrowers must repay these loans, even though many businesses are still recovering from pandemic‑related losses.
The Current Burden on Small Business
Recent research shows that firms with outstanding EIDL debt tend to carry higher overall debt levels, face more difficulty securing additional financing, and are less likely to report profitability. They are also more likely to be denied credit because of their debt load, even when controlling for age, industry, and credit risk.
Nearly $300 billion in EIDL debt remains outstanding years after the pandemic emergency ended. That kind of burden affects cash flow, limits growth, and can deter business owners from expanding or hiring. Unlike PPP loans, 96 percent of which have been forgiven, EIDL loans continue to require repayment, including interest over decades.
The contrast is stark. PPP was forgiven in part because it was widely recognized that many small businesses may never recover to pre‑pandemic strength without that support. For EIDL, forgiveness remains off the table, yet many of the same small businesses that received PPP also took on EIDL debt just to stay afloat.
Why Forgiveness Makes Economic Sense
Forgiving EIDL loans would provide immediate financial relief to thousands of small businesses still operating below capacity. Even if monthly payments seem manageable on paper, they add up over time, reducing a business’s ability to reinvest in employees, equipment, inventory, and innovation. Eliminating these liabilities could free up capital that drives growth, expands hiring, and strengthens local economies.
It isn’t merely a question of kindness. It’s economic policy. When small businesses thrive, they create jobs, support local tax bases, and contribute to community resilience. Many small business owners never fully bounced back from pandemic disruptions, and for some, EIDL debt is an albatross holding them back from full recovery.
What You Can Do
Right now, there is no broad EIDL forgiveness program in place. However, discussions continue in the halls of Congress about potential relief options for small businesses facing long‑term hardship. There are policy proposals that would consider loan forgiveness, reduced interest rates, or extended repayment deferrals, though none has yet become law.
If you believe that forgiving or reforming EIDL repayment would benefit small businesses and the broader economy, consider reaching out to your elected officials in Washington. Your voice matters, especially on policies that affect local employers and future job growth. Contact your Congressman and both U.S. Senators to express your support for practical relief measures.
Small businesses are the backbone of our economy. They have weathered one of the most significant economic disruptions in modern history. EIDL forgiveness isn’t just a lifeline for individual businesses, it’s a strategy to strengthen communities and give our local economy a fair shot at recovery.
Let your representatives know you stand with small business. Encourage thoughtful solutions that help them thrive long into the future.