The loan is to rebuild working capital for small businesses that encounter a 'disaster' as defined by whatever administrator does the defining.  Presumably that disaster leads to a loss of income, or cash flow, for the aforementioned small business.


I took $25K as prudent risk management to bolster my working capital position because, until a month ago, it looked like corn was going to be $2.70 cash, soybeans were going to be $8.00 or less cash, and Congress wasn't going to move on more coronavirus aid.  And, had it rained across the corn belt in August, that may have all come to pass.  And slower ethanol and feed demand due to landfilled hogs and less fuel being used for travel can certainly be attributed to COVID.  

Part of being able to access these really low interest rates is being able to qualify for the loans, and only a few of us would be able to fly through loan underwriting at $2.70 cash corn without a government backstop.


As per forgiveness, the SBA has already figured out how to send me a bill each month to start paying early, as I am accruing interest.  So I assume that the admin overhead associated with monitoring the huge amount of new EIDL loans comes when and if they want to review your tax returns, or if they have to subordinate to a new lien on new equipment.  My view is that Congress will likely approve more PPP-type aid before they would forgive secured loans, and if they are going to forgive secured loans, a logical first step would only be to forgive up to the first $10,000 of the EIDL loan advance that was supposed to be wrapped into the PPP loans, a logical second step would be to forgive the first $25K of the EIDL, and the last logical step would be complete forgiveness.

I personally give very low chances the EIDL loans are forgiven.