During the worst part of the pandemic, the federal government created the CARES Act. In the CARES Act, the SBA (Small Business Administration) was authorized to help businesses through two programs. The first was the PPP (Paycheck Protection Program) and the second was EIDL (Economic Injury Disaster Loan).
These were two different programs with two different purposes. The PPP loan could have been waived if the business owner provided the proper documentation. The EIDL loan was different and would need to be paid back at some point in time. Both of these programs provided much-needed assistance to small business owners throughout the United States.
Unfortunately, while these programs helped countless businesses, many businesses did not survive the pandemic, and those individual business owners may choose to file for Chapter 7 or Chapter 13 bankruptcy to obtain a fresh start.
It is important for those individuals who took out PPP & EIDL loans to make sure that their loans are properly listed on their bankruptcy schedules. This is so that anyone (co-signors) or any business associated with the loan and the individual lenders are properly notified of the bankruptcy filing and – more importantly – that the SBA is properly notified of the bankruptcy filing.
Depending upon the size of the loan, there may have been a personal guarantee attached by the business owner. Likewise, again, depending upon the size of the loan, there may have been collateral that secured the loan. Both of these issues need to be discussed with an experienced bankruptcy attorney prior to filing for Chapter 7 or Chapter 13 bankruptcy relief.
If you are experiencing severe financial pressure and are considering filing for bankruptcy, please feel free to call The Dellutri Law Group and schedule a complimentary strategy session today. If you have a PPP or EIDL loan which needs to be discussed, please mention that at the strategy session, and one of our expert attorneys will advise you accordingly.