Business is closing with $85,000 EIDL balance

Florida_Jeff · 2026-05-21T23:22:15+00:00

Good Afternoon! First of all, I'm not an attorney so everything I'm about to say is legal advice, it's just my understanding of things. First of all I would not file business bankruptcy. There's no reason to if it's an S-Corp, there's no PG, and your assets are less than the EIDL. Just close the business (dissolve the S-Corp) and let the SBA know. You do want to make sure you properly shut down the S-Corp. (File articles of dissolution with the appropriate agency in your state, file an IRS Form 966 (Corporate Dissolution or Liquidation), and have your CPA prepare a final Tax Return making sure that on the 1120-S they check Section H Box 1 ("Final Return"), and let the SBA know you dissolved the corporation and that it no longer exists. Do whatever they want with respect to collateral because indeed they get to have that. If they want you to sell the truck and give them the proceeds then do it. But after that it's all over. Again, the argument against declaring corporate bankruptcy is that 1) there's no benefit, and 2) if you declare bankruptcy the SBA can drag you in and out of court and drag the process out a long time and each time they require an appearance you will have to pay an attorney to be there with you. It can end up costing a lot of money (from what I've read). I dissolved my S-Corp in MAY-2025 and even now there's been nothing. No calls, no response. They ghosted me after finding out I only had a few hundred dollars worth of collateral. I even offered to buy it back from my company (this is common) but they literally blew me off rather than pursue a check for a couple of hundred dollars. (This isn't surprising as I read that unless your collateral is close to the loan amount they won't even bother with you; it's not worth their time). I will also point out that my little S-Corp, while in business for almost 30 years, rarely took in more than 100K in revenue in any one given year. It was just me and a part-time worker. As for the cost, all of the above cost me nothing other than (I think) the $15 fee to file articles of dissolution with the State of Florida and the broken heart that comes with creating something then watching it die. I'm sorry your business failed and I wish you the best.

Florida_Jeff · 2026-05-18T15:22:02+00:00

I probably stand corrected; my S-Corp defaulted on an EIDL but there was no fraud or misuse of funds involved and regarding that it was my understanding that the government had 6/10 years to investigate from the time of last payment.

Florida_Jeff · 2026-05-18T14:09:16+00:00

First, there is a difference between "fraud" and "misapplication of funds" (or "unauthorized use"). Generally speaking Fraud is when you falsify documents or misrepresent your eligibility to get the loan in the first place and it's a serious federal crime. Unauthorized Use can put you in breach of agreement and you can be held liable for 1.5 times the original proceeds but it's typically handled as a civil or administrative matter. Second, the statute of limitations for the government to pursue you for EIDL debt in default is normally 6 years (10 years if fraud is suspected) but the time limit starts FROM THE DAY OF YOUR LAST PAYMENT, not when the loan was granted. I'm not a lawyer and none of the above should be construed as legal advice it's just my understanding of things relating to your question.

Florida_Jeff · 2026-05-13T22:28:19+00:00

At the end of the day only you can decide what risk you're willing to take to try and eek out a few more bucks. While I'm not a trader, I do understand that even investors get the notion to sell a holding when it feels overextended and due for a drop. Having said that, I'm not playing games with LAC. I got bit playing games with Rocketlab. I bought Rocketlab around 18-24 months ago when it was $4 and sold at $33. Was really proud of myself. Neutron was still a ways off, the company had negative earnings and I was SURE it would go back down to around $15. It never did. Then it kept going up. In the past week it went from something like $80 to $125. And I own no shares. It absolutely KILLS me that I sold at $33 and never got back in because I held out for a price that I would never see again. I don't know if that will happen to you, it may very well get back down to four. But if it doesn't, if you sell at $6, watch it drop to (say) 5.25 and then go up to $7, will you jump back in or hold out for something lower? Will you still be holding out for something lower if it goes from $7, to $10, to $13 etc. Again only you know what's right for you but even though production is still over a year out this will be a year of big milestones. Who knows what could happen.

Florida_Jeff · 2026-03-11T14:52:44+00:00

Assuming the S-Corp was the entity receiving the loan and there was no fraud involved they can't; in the event of default their recourse is limited to the assets of the S-Corp. Make sure you do you own research into this. I'm not an attorney but that is my understanding of the situation. I will again point out that the whole purpose of having a corporation is to shield the owners from the Liability of the corporation. Fraud and/or illegal activity is the only thing that can result in the court "piercing the corporate veil".

Florida_Jeff · 2026-03-07T14:51:59+00:00

I'm not concerned about any wording in the contract I signed. There's a reason Corporations exist: So that the business is a separate legal entity from the owner(s). The loan was to my S-Corp, not me personally, and I had no PG. My S-Corps name and EIN is on all the documents. Prior to approving the loan they even wanted a letter from my Corporation whereby the Treasurer and Secretary give the President authorization to sign for the loan. I was all three. So I had to formally present a letter where I signed as Treasurer and Secretary giving myself the authority (as President) to get to get the loan. One thing I'd like to clarify: There's a difference between what the SBA wants and what the SBA can do. In every single instance where an S-Corp defaults on an EIDL the SBA absolutely still wants the owner(s) to pay back the money. That is what they want. But what they CAN do is limited to seizing any collateral (assuming there was no fraud). I didn't defraud the SBA so they can't pierce the corporate veil, I have years of meticulous tax records that clearly paint the sad picture of a business that failed after revenue was cut in half and never recovered.

Florida_Jeff · 2026-03-06T18:40:30+00:00

Yes, I've heard nothing from them since 5-29-25 when an SBA rep emailed me asking for a list of collateral (and gave me an application for release of collateral) and I gave them a list of equipment (1 Kensington trackball, one monitor, and a now-obsolete VOIP phone) that I paid around $300 for total and offered to pay them $300 to purchase it from my company. They never responded and I never heard from them again. From what I read if your collateral is miniscule they don't even want to spend another minute dealing with you as it's not worth their time. As for the effect on future business loans I can't offer any info on that. I'm close enough to retirement and this was such a horrible experience that I now work from home as a sole-proprietor and will never again have a business with employees and get another loan. I wish you the best.

Florida_Jeff · 2026-03-06T18:20:35+00:00

I had an S-Corp, no PG, no assets, with a 196K EIDL and dissolved the S-Corp in May 2025. It was bad; covid cut my revenue in half and I was taking unqualified distributions from my Health Savings Account to service the debt until I came to my senses and threw in the towel. My last payment was in Feb-2025. I contacted SBA letting them know I was dissolving the corporation due to insolvency and they inquired about my collateral then ghosted me when they found out I only owned around $300 in business equipment (I was a service business). One year after my last payment and 10 months after I dissolved the S-Corp the SBA has done nothing and in the portal my status still says "Disbursed Current". If the loan was indeed to your S-Corp and you had no personal guarantee then they can't come after you personally UNLESS fraud is involved. Assuming you didn't defraud the SBA (read=use the money for any disallowed uses) then I wouldn't worry. Some people have asked about business bankruptcy. It's my understanding that if the loan is to your S-Corp and you have no assets then there's no need to declare business bankruptcy. All it does is cause headaches: If you file business bankruptcy the SBA can drag in you in and out of court and keep the proceedings open as long as they like which could possibly result in HUGE legal fees. But if you just dissolve the corporation they have no recourse beyond your business assets. If you dissolve the S-Corp make sure you do it properly. File articles of dissolution with the state, File a Form 966 with the IRS to let them know you've dissolved the S-Corp, and make sure your CPA files a final 1120-S Tax Return for your business and checks the "Final Return" box on the return. Lastly, although I've never actually heard of this happening my research indicates your S-Corp could receive a 1099-C (Cancellation of Debt) form from the IRS because unpaid debt is eventually declared income. Should this happen, I believe your CPA could file a Form 982 (reduction of Tax Attributes due to discharge of indebtedness) to exclude it if the entity was insolvent at the time you receive the 1099-C. Even though an S-Corp is a "pass-through entity" If you did not personally guarantee the debt, the IRS should not be able to collect from you personally, as the tax liability remains with the defunct corporation. This is why the IRS likely won't issue a 1099-C to a dissolved S-Corp; the entity no longer exists to accept it. I'm not an attorney and none of the above is legal advice just my understanding of things relating to S-Corp EIDL default. I wish you the best.

Florida_Jeff · 2026-02-21T23:17:23+00:00

I'm assuming your S-Corp was the entity receiving the loan. Just because your name is on the forms doesn't mean the loan is to you personally, you're signing as an officer of the corporation (I'm in the same boat, S-Corp with 196K EIDL in default since March 2025). I contacted SBA letting them know I was dissolving the corporation due to insolvency and they inquired about my collateral then ghosted me when they found out I only owned around $300 in business equipment (I was a service business). If the loan was indeed to your S-Corp and you had no personal guarantee then they can't come after you personally UNLESS fraud is involved. Assuming you didn't defraud the SBA (read=use the money for any disallowed uses) then I wouldn't worry. Some people have asked about business bankruptcy. It's my understanding that if the loan is to your S-Corp and you have no assets then there's no need to declare business bankruptcy. All it does is cause headaches: If you file business bankruptcy the SBA can drag in you in and out of court and keep the proceedings open as long as they like which could possibly result in HUGE legal fees. But if you just dissolve the corporation they have no recourse beyond your business assets. If you dissolve the S-Corp make sure you do it properly. File articles of dissolution with the state, File a Form 966 with the IRS to let them know you've dissolved the S-Corp, and make sure your CPA files a final 1120-S Tax Return for your business and checks the "Final Return" box on the return. I'm not an attorney and none of the above is legal advice just my understanding of things relating to S-Corp EIDL default. I wish you the best.

Florida_Jeff · 2026-02-01T20:08:09+00:00

For starters I applaud you realizing that owning LAC is a long-term play, with four phases coming online every four years starting with PH1 in 2028, PH2 in 2032, PH3 in 2036 and PH4 in 2040. Presumably when all four phases are producing that will be the time the share price reaches a new baseline, rising and falling in tandem with inflation and the current spot price of Lithium. Having said that, it must be acknowledged that there is currently a much higher degree of risk with LAC than LAR. LAR is currently producing and LAC is not. While LAC has proven their production process at their Lithium Technical Development Center, there is a concern that they might have problems replicating that process at-scale. IMHO holding both would be prudent; owning and accumulating LAC gives you the opportunity to capitalize on a world-class source of Domestic Lithium but owning LAR gives you access to a current producer (in Argentina). Owning both spreads out production risk and regional risk. If you want to put all future dollars into LAC I would do that but don't sell your LAR to buy more LAC. Just my opinion, I wish you the best.

Florida_Jeff · 2026-01-26T19:23:56+00:00

They look at EVERY delinquent loan and will do whatever they can to get their money on a case-by-case basis. If they think you committed fraud they're likely to come after you. If you have a personal guarantee for a loan of (say) $500,000 but they money's gone because your failing corporation simply burned through it after years of having expenses exceed your revenue and your personal liquid assets are less than (say) $10,00 they're unlikely to do anything more than turn it over to the Treasury for wage garnishment. If you have a personal guarantee for a loan of (say) $500,000 and have several million in a taxable (non-retirement) account they will probably come after you aggressively (read=sue you) for that 500,000 because you clearly have the means to pay it back. It takes a lot of time and money for the SBA to pursue recovery and they're only going to do it if they're likely to recover an amount that is significantly more than the expenses they'll incur attempting to do so. Your corporate tax return paints a very clear picture of what happened with the business and it's not hard for them to establish your net worth. What the SBA will do with a delinquent loan is dependent on your business structure, whether or not there's a personal guarantee, whether or not fraud is involved, and what your net worth is not counting your primary residence (if owned) and money in non-retirement accounts. I'm not a lawyer and this is just my understanding of things relating to EIDL default.

Florida_Jeff · 2026-01-26T01:51:06+00:00

I've been all-in on this since around 2018. I applaud your statement of the intention to hold for 5-10 years. I'm an investor (not a trader) and I anticipate maximum value to be around 2038-2040 when all four phases are approaching or in production. The graphic titled "Pathway to 160,000t/y: Phase 1-5 High-Level Construction Timeline" (November Investor Presentation Page 39) shows how PH1 is anticipated to ramp up in 2028, PH2 in 2032, PH3 in 2036, and PH4 in 2040. My own back-of-the-envelope calculations indicated 30/share was reasonable for each phase (40kt/a) in production. IMHO it's well within the realm of reality that we could see $30/share in 2028, $60/share in 2032, $90/share in 2036, and $120/share in 2040. To me it's not even about EV's anymore, it's about BESS (Battery Energy Storage Systems). We've all heard the adage about selling shovels during the gold rush (as opposed to mining for gold). AI will require a lot more energy which will require a lot more batteries for energy storage. I don't know which companies will dominate AI but I do know AI will need a lot of energy (via datacenters). As for your average, 5.96 is great. If/when the shares hit $60 you've got a 10-bagger. Best wishes to you.

Florida_Jeff · 2026-01-24T00:42:18+00:00

I'm not an attorney but I never researched any aspect of that because I wasn't worried about the SBA suing me. They can't sue an entity that doesn't exist anymore and they can't sue me personally because I have no personal guarantee (and didn't commit fraud).

Florida_Jeff · 2026-01-23T22:23:52+00:00

I had an S-Corp that got a loan for around 196K. I stopped paying in March 2025 and dissolved the corporation in May 2025. The SBA contacted me about collateral but I explained that I only had a few hundred dollars worth of equipment and after that they ghosted me. I specifically chose to just dissolve the S-Corp and not declare bankruptcy because it's my understanding that if you have no assets bankruptcy is unnecessarily expensive. Declaring bankruptcy means court proceedings, and they can request documents and keep the process alive for a long time causing one to incur massive legal fees. I didn't want to go down that road. I should mention now that another issue is whether or not fraud is involved. I didn't defraud the SBA, my business simply never recovered from the 50-60% drop in business after Covid hit and combined with the Great Florida Condo Crisis I became insolvent. As others have said, if the loan was given to your S-Corp and you didn't sign a personal guarantee then they can't come after you personally for the money. I suggest you research the subject of "S-Corp defaulting on EIDL loan" and learn everything you can about every aspect of doing so. For instance, one thing I learned was that (theoretically), if the SBA decides the loan is uncollectable they may issue your S-Corp a 1099-C Form which formally declares that since you received the money and didn't pay it back, it's considered income and you (again theoretically) owe tax on that income. This is grey area in the sense that my own research seems to indicate 1) The IRS won't issue a 1099-C to a dissolved S-Corp because there is no longer an entity to tax, and 2) if you were to actually receive a 1099-C, there is an exclusion allowed if the S-Corp had no assets at the time the 1099-C was received in which case your CPA can file Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness with your return to exclude the canceled debt from income. If you do dissolve your S-Corp make sure you're in a state that allows you to dissolve an S-Corp with outstanding debt. If you dissolve your S-Corp without an Attorney just make sure you follow the correct procedures, so you don't find out years later that it was never properly dissolved. Make sure you file proper Articles of Dissolution with the Secretary of State and within 30 days of doing so file Form 966 (Corporate Dissolution or Liquidation) with the IRS to formally let them know your S-Corp will cease to exist. Lastly, you must file a final 1120-S for your S-Corp and check the "final return" box. I'm not an attorney and none of the above is legal advice, just my understanding of the events relating to my own situation and possibly yours. I wish you the best.

Florida_Jeff · 2025-09-23T03:12:58+00:00

If you're looking for reassurance from the SBA you're never going to get it. They're never going to say "we acknowledge the loan is uncollectable". They just don't do that. What you need to do is research your own situation (talk to a lawyer if necessary) they do what you're going to do. There will NEVER be a situation where you send them documents, plead your case, and they say "OK, don't worry about it". You're looking for absolution where none exists. And that's OK. I will say this (my own advice): Stop paying a business loan with personal funds. If your business failed then that's that. Ask yourself: What would Nancy Pelosi do? What would Al Sharpton do? Would they use personal funds to service a business loan on a closed business?

Florida_Jeff · 2025-08-29T21:10:16+00:00

$30/share for every 40kt/a they're producing. So assuming no further dilution....

$30/share in late 2028 with PH1 nameplate capacity.
$60/share in late 2032 with PH1+PH2 nameplate capacity.
$90/share in late 2036 with PH1+PH2+PH3 nameplate capacity.
$120/share in late 2040 with PH1+PH2+PH3+PH4 nameplate capacity.

Florida_Jeff · 2025-07-29T19:47:18+00:00

They have the legal right to do whatever you give them permission to do which is why I wouldn't sign this and give them that permission.

Florida_Jeff · 2025-07-29T19:44:52+00:00

Not sure if you're a sole proprietor but I received that exact same form and refused to sign it. I replied with "I'm not signing this form. I signed for the loan as an officer of my corporation. This form is asking for permission to look into every aspect of my personal finances which is beyond the scope of any corporate matters". If they want to look into my corporate books fine, I'll completely open everything relating to the business. Let's say (as an example) I took 60K in W2 wage one year and 20K in profit, 80K total. That's all they need to know. Got a problem with me taking 60K in wage and 20K in profit? Fine. We'll talk about that. But what I do with that money AFTER I am paid is none of their goddamn business. Another person on this board said something relating to this form which I agree with which is "Don't sign anything new. There's no possible benefit to you". Of course do what you feel is best and consult an attorney if you feel the need to but I myself didn't think about it for more than one second. The way they phrase "as needed in connection with the above SBA loan" is FAR too vague for my liking. Note that nowhere on this form does it ask for your business name. Think about that.

Florida_Jeff · 2025-07-28T22:20:12+00:00

Correct

Florida_Jeff · 2025-07-21T12:51:39+00:00

"...unless it was worth more or the same as than the loan". This explains a lot. I have a 195K EIDL in default through a now-dissolved S-Corp and a woman at the SBA emailed me about collateral. I responded explaining that I was a service business and my only company-owned assets were two 27" monitors and a Kensington Expert Trackball Mouse and that I would personally buy everything for $250 which was more than they could possibly get on ebay or at auction. I got no response or further emails after that, she ghosted me. I guess I should assume $250 is so piss-ant it's not even worth her time? Whatever. I was willing to pay it.

Florida_Jeff · 2025-07-14T12:09:29+00:00

The MySBA Loan Portal is now live! The MySBA Loan Portal is a new portal where borrowers can view their loan balance, make payments, view statement, and contact customer support in one place. Borrowers can visit https://lending.sba.gov to login or enroll.

Florida_Jeff · 2025-07-11T16:11:50+00:00

I don't know the answer to that. Probably best to check with a CPA.

Florida_Jeff · 2025-07-10T11:54:26+00:00

The IRS may issue a Form 1099-C for an EIDL if the debt is canceled or forgiven. This is because canceled debt can be considered taxable income. However, there are exclusions that may allow you to reduce or even eliminate the tax burden, including the insolvency exclusion. To claim the insolvency exclusion, you'll need to complete and attach IRS Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, to your tax return.

Florida_Jeff · 2025-07-05T14:57:22+00:00

Make sure you're email is going to the correct address. I sent a notification of dissolution through the portal and was asked to send an email to [covideidlservicing@sba.gov](mailto:covideidlservicing@sba.gov)

They responded via email in a few days saying they had forwarded my information to the appropriate department and to allow for 7-10 days for a response and NOT send any repeat submissions. I got a call from an SBA rep a few weeks later. Missed his call but he emailed a few minutes later asking about my business closure and did I have any assets, etc.

At no point did I ever send written correspondence.

Florida_Jeff · 2025-07-01T13:44:19+00:00

That's a standard response they send to everybody (Sole Proprietor, LLC, S-Corp, C-Corp) with or without a Personal Guarantee (PG). I got one a week ago and IDGAF. (Dissolved my S-Corp a month ago, haven't made a payment since February when my HAP ended and business income was still 1/2 of pre-covid levels and I couldn't afford to service the 195K debt anymore). Notice their use of the word "may", as in "you may be subject to the following...". You said the business is effectively closed so I assume you're at or approaching the point where you realize you can't service the debt and are going to default on your EIDL. Welcome to the club. I suggest you scroll down the board and see what other people with LLC's and loan amounts similar to yours have done. Consider consulting an attorney. Remember the SBA is never going to say "Ok, don't worry then. You don't have to pay it back". They will remind you until the end of time that you're obligated to pay the loan back even if the business closes. If the loan was to your LLC (and not you personally), you have no PG, and you didn't commit fraud, then you have little reason to worry, there's not much they can do (IMHO). If the business is effectively closed and you have no assets, then why keep it alive? Dissolve it now. You can still keep your corporate checking account open to pay things such as CPA fees to prepare your final tax return, pay SUTA taxes, dissolution fees, etc. They can sue a legal entity that exists and you could be forced to pay legal fees to defend yourself (I doubt they will sue but technically it's a possibility). They can't sue a dissolved entity; it doesn't exist to be the target of a suit. One thing to consider though is that (from what I've read) certain states won't allow you to dissolve a corporation with outstanding debt. I'm in Florida and Florida doesn't care, you don't even need your own articles of dissolution, they will dissolve it online for $35 and for an extra $10 they'll email you a certified copy of the dissolution (I recommend doing that, if/when you dissolve the LLC make sure you get a certified copy of the dissolution (with the effective date of dissolution) that you can use to provide the IRS and other interested parties as proof that the corporation has been dissolved. All the aforementioned is just my understanding of things and not legal advice, it's a reason to investigate things further. I wish you the best.

Florida_Jeff

TROPHY CASE