Covid EIDL Charge-Offs Explode, Increase By $52 Billion in FY 2023

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The SBA charged off an extraordinary amount of Covid-era EIDL loans in its FY 2023, hitting $52 billion! That was up from the $220 million charged-off collectively in FY 2021 and 2022. $52 billion equates to 17.2% of the unpaid principal balance, an astonishing percentage considering that most of these loans still have approximately 28 years left on their term. Many borrowers did not even have to start making payments until 2023, thanks to an initial 30-month deferment program followed by an additional 6 month deferment assistance option. The SBA’s FY ended on September 30, 2023 so this does not reflect any loans charged off for the last 3 months of the year.

Per the SBA, “Loans are charged off if SBA determines no additional principal and interest from the borrower will be recovered via the agency.”

The remaining unpaid principal balance on Covid-era EIDL loans is $302 billion. Given that the unpaid principal balance was $358 billion last year, the reduction is almost entirely due to charge-offs rather than borrowers paying down the principal.

PPP loan charge-offs were also up, hitting $10.6 billion in FY 2023, up from $4.8 billion in FY 2022.

The SBA published this data as part of its regular FY reporting on February 2.

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Last modified: February 4, 2024

Category: Small Business

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