$47 Billion in COVID Loans Charged Off: The SBA's Collection Nightmare

$47 Billion in COVID Loans Charged Off: The SBA's Collection Nightmare By The Numbers

Posted: January 19, 2026 - 8:00 AM | OIG REPORT

The SBA's Office of Inspector General just released another damning report on the agency's COVID-19 loan collection efforts. The numbers are staggering: $47 billion in COVID-19 EIDLs have been charged off from nearly 370,000 loans. And they're still trying to collect on another $14.7 billion from 96,000+ delinquent borrowers.

    $47 BILLION CHARGED OFF - 370,000 LOANS - The SBA gave out nearly 4 million COVID EIDLs totaling $387 billion. They've already written off more than 12% of it.

    

What "Charged Off" Really Means

When the SBA "charges off" a loan, they're essentially admitting they'll never collect it. The borrower defaulted, the money's gone, and taxpayers are holding the bag. But here's the kicker: even charged-off loans get sent to collections. The SBA is trying to squeeze blood from stones.

According to the OIG report, the SBA's collection efforts have been, shall we say, less than stellar:

• Did not perfect security interest on borrower deposit accounts

• Did not conduct post-default site visits to verify business status

• Did not report all delinquent obligors to credit bureaus

• Did not refer debts to the Department of Justice for litigation

    TREASURY RETURNED DELINQUENT LOANS TO SBA - The Department of Treasury sent these loans back to SBA for collection through March 31, 2026. The SBA is on the hook for actually recovering something.

    

The Fraud vs. Hardship Distinction

Here's what the report doesn't separate out: how many of these charged-off loans were fraud versus legitimate businesses that failed? The pandemic destroyed countless real small businesses. Many of those owners took EIDL loans in good faith, watched their businesses collapse anyway, and now can't pay.

The SBA is treating all delinquent borrowers the same way, whether they're fraudsters who bought Bentleys or restaurant owners who lost everything. That's bureaucracy for you: incapable of nuance, excellent at causing pain.

What Happens Now

If you have a delinquent EIDL loan, expect the SBA to get more aggressive. Treasury offset of tax refunds. Wage garnishment. Credit bureau reporting. They need to show Congress they're doing something about this mess. You're the something.

If you legitimately cannot pay, document everything. Economic hardship deferrals exist, but you have to fight for them. The SBA won't volunteer options. You have to know they exist and demand them.