Lessons Learned From the EIDL

In times of economic hardship, access to timely financial assistance can be a lifeline for struggling businesses. One such program which is in the mainstream today is the Employee Retention Tax Credit (ERTC) program that provides a payroll tax credit of up to $26,000 per W2 employee who those businesses paid during the pandemic. A predecessor program designed to support entrepreneurs during the COVID-19 pandemic was the Economic Injury Disaster Loan (EIDL). However, despite its noble intentions, the EIDL loan met an untimely demise, leaving many business owners in dismay as they missed out on this critical opportunity. In this article, we will explore the rapid expiration of the EIDL loan, shed light on the significant number of entrepreneurs who were unable to secure the aid they desperately needed and extend a warning to business owners not to assume that other programs will stick around as long as was originally hoped or expected.

The Promise of the EIDL Loan

Introduced by the Small Business Administration (SBA), the EIDL loan was created to provide financial relief to businesses experiencing economic injury due to disasters. With the onset of the pandemic, the program aimed to support struggling enterprises, helping them survive the economic downturn, retain employees, and cover operational costs. The EIDL loan offered low-interest rates, long repayment terms, and flexible use of funds, making it an attractive lifeline for countless business owners across various industries.

A Swift and Unanticipated Conclusion

The EIDL loan, initially set to last until the designated disaster period ended, was intended to provide support throughout the duration of the economic downturn. However, the unprecedented demand and the rapidly changing circumstances caused the program to expire abruptly, leaving many entrepreneurs grappling with missed opportunities. As businesses battled uncertainty, changing regulations, and an overwhelming influx of applications, the SBA found itself overwhelmed, struggling to meet the overwhelming demand for financial assistance.

Unfortunate Consequences

The untimely expiration of the EIDL loan had far-reaching consequences, resulting in numerous business owners missing out on the vital support they desperately needed. The loan program’s sudden closure left countless entrepreneurs without access to much-needed funds, hindering their ability to maintain operations, pay employees, and navigate the challenging business landscape. As the pandemic persisted, this loss proved especially detrimental to small and minority-owned businesses that were already vulnerable and disproportionately impacted by the economic crisis.

A Testimony of Missed Opportunities

The number of business owners who missed out on the EIDL loan due to its rapid expiration was staggering. Thousands of entrepreneurs were left disheartened, as they were unable to submit their applications in time or were caught off guard by the sudden closure of the program. The limited window for application submission, coupled with the overwhelming demand, resulted in countless businesses losing out on this critical financial lifeline.

Lessons Learned and Moving Forward

The swift expiration of the EIDL loan serves as a valuable lesson for policymakers and administrators tasked with creating and managing financial assistance programs during times of crisis. It highlights the importance of effective communication, streamlined processes, and robust infrastructure to meet the needs of businesses promptly. Moving forward, it is crucial to ensure that such programs are adequately resourced and can adapt to evolving circumstances, allowing businesses fair access to the assistance they desperately require.

As to business owners, the rapid cancellation of the EIDL program should serve as a cautionary tale for those business owners considering pursuing the Employee Retention Tax Credit. Advice from CPAs not to pursue the credit at all without fully understanding the eligibility requirements or advice to “wait and see” how to IRS scrutinizes current ERTC claims, could yield unexpected and traumatic results related to delays in filing. The Employee Retention Tax Credit is not an entitlement. The laws that created the ERTC could be amended or repealed, or the IRS could issue supplemental formal written guidance limiting its current interpretation of the CARES Act and other statutes that dictated eligibility for the credit. The moral of the story is, to the extent that business owners have decided not to pursue the ERTC, then those business should be at peace with their decision not to claim the credit. However, if business owners meet the qualifications and are simply “thinking about it” or “waiting to see what happens”, those business owners ought to strongly consider the risks associated with procrastination.


The EIDL loan’s rapid expiration and the subsequent missed opportunities for business owners left many entrepreneurs in dire straits during an already challenging time. The untimely closure of the program underscored the need for improved processes, effective communication, and comprehensive support structures to ensure the timely delivery of financial assistance during times of crisis. As we reflect on this unfortunate situation, it is essential that policymakers learn from these experiences and work towards creating more resilient and accessible programs to support businesses during future crises. And, it is important for business owners to strongly consider the risks associated with delaying their decision-making process while engaging in their risk-benefit analysis around claiming government stimulus dollars.

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With the help of the tax attorneys at Biz Head Law, businesses can quickly determine if they are qualified for this powerful incentive. In just 10 minutes or less, they are also provided with an estimate, which can be up to $7,000 per quarter for each of the first three quarters of 2021 and up to $5,000 for 2020 for a total of $26,000 per full-time W2 employee under the CARES Act.

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