What you need to know about COVID-19 EIDL Loan deferments and interest accrual

Did your business receive a COVID-19 EIDL Loan?

Let’s clear up some misconceptions about the deferment period and how interest actually accrues on the loan. 

As you may know, the United States Small Business Administration announced extended deferment periods for the COVID-19 EIDL Loan program until 2022.

  • All COVID-19 EIDL Loans issued in 2020 will have a first payment due date extended from 12-months to 24-months from the date of the note.
  • All COVID-19 EIDL Loans issued in 2021 will have a first payment due date extended from 12-months to 18-months from the date of the note.

But although no payments are required during the deferral period, interest still accrues on the COVID-19 EIDL loan. Interest rates are 3.75% (2.75% for non-profit organizations). The loan term is 30 years.

With no payments due yet, the Small Business Administration isn’t sending any statements or payment stubs, so it’s very easy for busy business owners to keep on with business as usual without realizing how many additional loan dollars are accruing in deferment interest.

To give you an example, businesses that received loans of $150,000 will accrue over $11,000 in interest over a 2-year deferment period on their COVID-19 EIDL Loan. 

You can see how that interest adds up. 

So if you no longer need the cash or are otherwise in a position to start paying now, despite the allowed deferral of payments, you may want to begin making payments on the loan to avoid the build up of accrued interest. There is no prepayment penalty for the COVID-19 EIDL Loan.

For help on how to do that, please reach out to us. We’ve helped hundreds of businesses make the most out of these loans, and advised on how best to use the funds for growth and stability. We work with service-based companies with 250K or more in annual revenue.

For information on how and where to go to begin paying your COVID-19 EIDL Loan back, follow these steps: 


Pay by accessing the U.S. Treasury’s website https://www.pay.gov and completing the SBA 1201 Borrower Payment form. Accepted forms of payment are:  bank draft (ACH), debit cards, prepaid debit cards, and PayPal (limited to ACH accounts). This is a free service available 24/7.

By Bill Pay

When using a bank’s bill pay service, add SBA as a bill pay payee using the following information:

Payee Name:US Small Business Administration
Payee Payment Address: P.O. Box 3918 Portland, OR 97208-3918
Account Number:Enter your 10-digit SBA Loan Number

By Mail

Make checks or money orders payable to SBA. Please enter your 10-digit SBA loan number for your COVID-19 EIDL Loan in the memo field and mail along with the remittance coupon in the return envelope provided with your billing statement or address an envelope to the following:

United States Small Business Administration

P.O. Box 3918

Portland, OR 97208-3918

This article is for informational purposes only and not intended to be legal or official tax advice. We always recommend discussing with your attorney or tax professional to determine how this information affects your specific situation.

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