How to Pay Back a PPP or EIDL Loan

Loan Payback

If your business was fortunate enough to have received a Paycheck Protection Program (PPP) loan or an Economic Injury Disaster Loan (EIDL), you may have now decided that you want to pay it back for for any number of reasons:

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

Whatever your reason, you may want to pay it back. It can be a confusing process, so how do you do that?

PPP Loan Repayment

Paycheck Protection Program (PPP) loans were made by lenders, not by the Small Business Administration. You must pay your loan back to your lender, not to the SBA. All of the major financial institutions, Wells Fargo, JP Morgan Chase Bank, Bank of America, etc. have begun to post their process for Paycheck Protection Program (PPP) loan repayments. Contact your lender to ask for instructions for returning your PPP loan.

EIDL grant repayment

Keep in mind that borrowers generally don’t have to repay an EIDL grant. These grants were given in increments of $1,000 (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 for now it is still free money for your business. 

However in some cases, it’s possible that your organization did not apply in good faith, or did not fill out the application truthfully. Another example could be that you discovered that your business really didn’t need the money, or maybe you just want to return the grant. The SBA specifies that you should contact them at +1 (800) 659-2955 or you can email disastercustomerservice@sba.gov for payment instructions.

EIDL Loan Repayment

You can locate the website to repay your EIDL loan at www.pay.gov

To get started have your 10-digit loan number and a payment amount ready in order to pay it back. There is no prepayment penalty associated with the EIDL loan 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. (Note: 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 if you have not yet received your 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: 

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. 

You will want to record and keep good records of any and all payments you make and when you make them. It is a good idea to also take screenshots for backup.

If you did receive an EIDL loan for more than $25,000, you will want to check your business credit reports to make sure that the SBA releases the UCC-1 filing. UCC filings typically impact your ability to qualify for other small business loans.

The same form applies if you only want to pay back a portion of the loan early as well.

For assistance with your EIDL or PPP loan or grant please contact us at MCDA CCG Inc., today, we are happy to assist and guide you through the process.

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