How to Pay Back an EIDL or PPP Loan

How to Pay Back an EIDL or PPP Loan

How to Pay Back an EIDL or PPP Loan

If your business received an Economic Injury Disaster Loan (EIDL) or Paycheck Protection Program (PPP) loan, you may have determined it isn’t a good fit for your small business for any number of reasons:

  • You just wanted the EIDL grant and not an EIDL loan, 
  • You didn’t understand the loan terms when you applied,
  • You can’t use the EIDL funds or PPP funds the way you hoped
  • You don’t think most of your PPP loan will be eligible for forgiveness,
  • You aren’t sure your business will survive to be able to repay a loan

Whatever the reason, you may want to pay it back. How do you do that? It can definitely be confusing! 

EIDL Loan Repayment

The website you can use to repay your EIDL loan can be found at Pay.gov

You must have your 10-digit loan number and a payment amount in order to pay it back. There is no prepayment penalty but it is possible a minimal amount of interest has accrued from the time the loan was disbursed. In addition, you’ll have to pay back the UCC filing fee of $100 if one applies to your loan. (UCC-1 filings apply to EIDL loans greater than $25,000.) 

Request a payoff amount before you submit your payment by contacting either: 

  • The Service Office listed on your monthly 1201 Borrower Statement OR 
  • The Disaster Customer Service Center at 1-800-659-2955 or if you have not yet received a 1201 Borrower Statement

You will be able to pay by 

  • Bank account (ACH)
  • PayPal account
  • Debit card

Here’s what the repayment form looks like: 

SBA Form 1201 loan repayment

Tip: Always make sure you are on the secure Pay.gov website when you make a payment! Look for the padlock in the URL bar of the page that you can click on to confirm you are on a secure site. 

Keep good records of any payments you make and when you made them; take screenshots if necessary.

Note that if you did get an EIDL loan for more than $25,000, it’s a good idea to check your business credit reports to make sure the SBA releases the UCC-1 filing. UCC filings can impact your ability to qualify for another small business loans.

If you just want to pay back some of the loan early but not all of it, you’ll use the same form.

EIDL Grant Repayment 

Remember that borrowers generally don’t have to repay an EIDL grant. These grants were given in increments of $1000 (up to $10,000) and should have been deposited into your bank account with the notation EIDG (with the “g” for “grant”). Until the IRS says otherwise, these funds may be taxable but it’s still free money for your business. 

However, if you did not fill out your application truthfully, did not apply in good faith, or you discovered your business really didn’t need the money, for example, you may want to return your grant as well. The SBA specifies that you should not use the information above to submit a payment for an EIDL Grant. Instead, contact the SBA at 1-800-659-2955 or DisasterCustomerService@sba.gov for  payment instructions.

PPP Loan Repayment

Paycheck Protection Program loans were made by lenders, not by the Small Business Administration. You must pay your loan back to your lender, not to the SBA. Contact your lender to ask for instructions for returning your PPP loan, 

This article was originally written on September 16, 2020.

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ABOUT AUTHOR

Gerri Detweiler

Education Director for Nav

Credit expert Gerri Detweiler is Education Director for Nav. She has more than three decades of experience in consumer credit education, has been interviewed in more than 3500 news stories, and answered over 10,000 credit questions online. Her articles have been widely syndicated on sites such as MSN, Forbes, and MarketWatch. She is the author or coauthor of five books, including Finance Your Own Business: Get on the Financing Fast Track. She has testified before Congress on consumer credit legislation.

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6 responses to “How to Pay Back an EIDL or PPP Loan

  1. Well, now the sba want us to pay back the so called “free money” from the eidl grant under the ppp loan repayment. SBA LIED!

    1. That’s my same thought….I never got an eidl loan only the grant. Now that I’m filling out the ppp forgiveness application the SBA IS MAKING THE BANK THAT SENT THE PPP MONEY bill me for the grant….
      Everytime I call the sba they tell me I have no loan and do not have to repay the grant but the bank was told differently by the sba….where are the legislation rules for this?

      1. It’s true that the grant does not have to be repaid but the grant must be deducted from PPP for forgiveness purposes. It’s in the CARES Act (Section 1110):
        6) UNEMPLOYMENT GRANT.—If an applicant that receives
        an advance under this subsection transfers into, or is approved
        for, the loan program under section 7(a) of the Small Business
        Act (15 U.S.C. 636(a)), the advance amount shall be reduced
        from the loan forgiveness amount for a loan for payroll costs
        made under such section 7(a).

    2. This was part of the CARES Act as I referenced in the other comment to JD. I have heard that some legislators have talked about changing that. You may want to reach out to your elected officials in Washington.

      1. How long do i have to pay back PPP loan – I know there maybe interest. But mine was so small $8k because of the timing of my payroll last year (cash based) I didnt use it….help!

        1. It depends on when you took the loan BJ. As we explain in this article: The maximum loan term is five years for any loan originated on or after June 5, 2020, but nothing prohibits lenders and borrowers from mutually agreeing to a similar repayment period for PPP loans made prior to the date this legislation becomes law.