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Can EIDL Loan Be Transferred to a New Owner?

Have you ever wondered if an EIDL loan can be transferred to a new owner? You’re in luck! This blog post is all about answering that very question. Let’s dive in and unravel the facts together.

Overview of EIDL Loans

The EIDL (Economic Injury Disaster Loan) scheme is backed by the U.S. Small Business Administration (SBA) and was specifically designed to supply working capital to businesses struggling due to catastrophic events. Offering long-term, affordable repayment options up to 30 years, these loans are meant to help businesses get back into full swing.

For higher loan amounts, over $25,000, collateral requirements come into play as well as personal guarantees for amounts exceeding $200,000. Take note, however, that you cannot use this loan for expanding or scaling your business. They are strictly meant for running costs like utilities or rent.

Eligibility for EIDL

To even qualify for an EIDL loan, your business must meet criteria set by the SBA. These include having fewer than 500 employees and not being engaged in certain restricted types of business. Also bear in mind that even after qualifying, there are set terms and conditions your business must adhere to to keep the loan.

If you would like more information on the nitty-gritty of loan eligibility and conditions, it would be a smart move to consult with a Certified Public Accountant or an attorney.

Transferring EIDL Loans: General


At face value, it might seem like you can transfer an EIDL loan to another business owner. However, there’s much more to it than handing over the business reins. The SBA does not allow loan assumptions; the process isn’t as simple as transferring the debt to a new owner.

It might be possible to transfer an EIDL loan, but this typically involves a complex process requiring SBA approval. This is why it’s important to consider seeking legal counsel before starting any transfer process.

Terms and Conditions on EIDL Transfer

Can EIDL Loan Be Transferred to a New Owner

The SBA comes with stringent terms when it comes to loan transfers. Any changes in ownership need to be reported to the SBA, and even then, prior approval is always required. Remember that violating these covenants could lead to the immediate repayment of the entire loan.

The issue of collateral is another potential roadblock in transferring your EIDL loan. Recall that for loans exceeding $25,000, collateral is normally tied up, and a secured interest in the assets of the business is filed by the SBA.

Process of Transferring EIDL

The process for transferring an EIDL can be intricate. First things first – get legal guidance! You need to submit a written request to your specific loan servicing center detailing why you wish to transfer ownership. The SBA will then review this and may grant or deny your request.

The new business owner, if the request is granted, will then have to meet all the qualifications and stipulations initially met by the original loan recipient. In effect, this leads to a completely new application process for them.

Potential Risks of EIDL Transfer

Transferring an EIDL loan does come with its own set of perils. A new owner acquiring a company with an existing EIDL loan runs the risk of taking on additional debt as well as potential liabilities connected to how the prior owner used the loan proceeds.

Furthermore, if the previous owner violated any covenants attached to the EIDL loan, such as misusing the funds or falling behind on payments, then the new ownership may be in instant breach of their new loan agreement before they even establish themselves in their new business.

Common FAQs about EIDL Transfer

One frequently asked question is about the possibility of selling a business entity while still having an active EIDL loan. The answer here is yes, one can sell a business with an ongoing loan. But remember, you cannot just transfer your debt. The SBA will require you to pay off the current loan balance, and any remaining proceeds can then go towards financing your sale.

Another common question relates to debts after bankruptcy – what happens when you file? Well, it’s not guaranteed that filing for bankruptcy will absolve you from your SBI debt: some debts may remain even after filing.


While the mere transferring of an EIDL isn’t straightforward, it’s not impossible. However, it’s imperative to remember that each case will have unique circumstances needing particular attention. Before starting such a process, always aim for legal consultation either from an attorney or a Certified Public Accountant familiar with SBA loans and the EIDL loan transfer process.