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The Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) were essential in supporting businesses during the COVID-19 pandemic. However, with both programs now closed to new applications, businesses must now manage repayment obligations and explore new financing options.
The March 3, 2024 forgiveness deadline for PPP loans has passed. Unforgiven loans are now subject to collections by the U.S. Treasury and IRS, which may result in wage garnishment, withheld tax refunds, and negative credit impacts. Borrowers must act promptly to avoid these outcomes by working with their lenders on repayment plans.
EIDL loans remain in repayment mode, as they are not eligible for forgiveness (except for advance grants). For businesses experiencing financial hardship, the SBA Hardship Accommodation Plan offers temporary relief by reducing payments to as low as $25 per month for six months. Borrowers are encouraged to monitor their loan status on the MySBA Portal to prevent defaults and collections.
This article will provide a detailed look at the current state of PPP collections, EIDL repayment plans, and available financing options to help businesses manage obligations and plan for future growth.
The March 3, 2024 forgiveness deadline for PPP loans has passed. Unforgiven loans are now subject to collections by the U.S. Treasury and IRS, and borrowers face serious financial risks, including wage garnishment, withheld tax refunds, and credit damage. Acting quickly to address outstanding loans is critical to avoid these outcomes.
Although forgiveness is no longer available, businesses can still refinance outstanding debt through SBA 7(a) loans, business term loans, or lines of credit to better manage their financial obligations.
As of 2024, businesses with COVID-19 EIDL loans must focus on managing their repayment obligations. These loans are not eligible for forgiveness (except for the EIDL advance grants) and require full repayment. However, the SBA has introduced flexible hardship accommodations for borrowers facing financial difficulties.
Taking proactive steps is crucial to avoid collections and maintain financial stability. Borrowers should monitor their loan status closely through the MySBA Portal and apply for hardship accommodations if necessary to prevent default.
As PPP and EIDL loans phase out, businesses must shift their focus to other financing solutions to manage operations, seize growth opportunities, or refinance debt. Below are some key alternatives available in today’s market, with SBG Funding offering a range of flexible, fast, and tailored options to support businesses at every stage.
SBG Funding offers tailored financing options, helping businesses stay agile and financially secure throughout 2024 and beyond. Whether your business needs working capital, equipment upgrades, or temporary cash flow relief, SBG’s flexible lending solutions can provide the right support at the right time.
Choosing the right financing solution depends on your business’s specific needs and financial goals. With PPP and EIDL loans no longer available, it’s important to align new financing options with your operations and long-term strategy.
If you need working capital to manage seasonal fluctuations or short-term cash flow gaps, a business line of credit can provide flexibility. These lines allow you to borrow only what you need and pay interest on the drawn amount, helping manage expenses without overextending.
For large projects like expansions or equipment purchases, long-term financing—such as an SBA 7(a) loan or equipment financing—offers structured payments over several years, minimizing immediate financial strain. This option ensures you can invest in growth while keeping your cash flow healthy.
If you’re still repaying an EIDL loan, refinancing through a term loan can consolidate debt and potentially lower your monthly payments. This strategy can improve cash flow, making it easier to manage day-to-day operations and plan for growth.
If you missed the March 3, 2024, PPP forgiveness deadline, contact your lender as soon as possible to avoid collections. Short-term financing, such as a bridge loan, can help cover any urgent gaps while you negotiate repayment terms or arrange refinancing.
If your business claimed the Employee Retention Credit (ERC) but may not have been eligible, the IRS Voluntary Disclosure Program (VDP) offers an opportunity to repay the credit at a reduced rate. This program is available through November 22, 2024, allowing businesses to avoid penalties and interest by settling their claims proactively. While new ERC applications are no longer accepted, managing past claims correctly is essential to avoid future audits, collections, or eligibility issues with federal programs.
When evaluating financing, consider factors like repayment terms, interest rates, and prepayment options. Solutions with no prepayment penalties offer flexibility, allowing you to repay early and save on interest costs.
By thoughtfully aligning financing options with your business needs, you can remain agile and financially secure in 2024 and beyond. Whether you require flexible capital, long-term investment funding, or debt refinancing, making informed decisions will help position your business for success.
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