When a business with an outstanding Small Business Administration (SBA) Economic Injury Disaster Loan (EIDL) is sold, the loan obligation does not automatically disappear. The responsibility for the debt typically remains with the original borrower, unless specific arrangements are made during the sale process. For example, if a restaurant owner with an EIDL decides to sell the business, the owner is generally still liable for repaying the loan. The sale proceeds may be used to pay off the loan, or alternative agreements might be negotiated.
Understanding the implications of a business sale on an EIDL is crucial for both the seller and the buyer. Failing to address the loan appropriately can lead to serious financial repercussions, including legal action from the SBA. Historically, the SBA has maintained strict enforcement of loan agreements, emphasizing the importance of clear communication and adherence to loan terms. The value lies in ensuring a smooth business transition and avoiding future financial burdens related to the outstanding debt.
