OIC EIDL Offer in compromise on a small EIDL (under 25K) loan?

Offer in Compromise (OIC) on a small COVID EIDL $24,100) loan?

Question?

Has anyone here gotten an Offer in Compromise (OIC) on a COVID EIDL around $24,100?

I’m current on payments. My home based business sole proprietorship brings in under $10k year gross and I’m probably going to shut it down and get a regular job. Business assets are worth maybe $500.

I’m just trying to find out if SBA would consider a reduced settlement or loan forgiveness on a loan like mine.

This is a very real scenario right now, and you’re asking the right question before you shut the business down.

Short answer:

 Yes, SBA can compromise smaller COVID EIDL loans — including ones around $24,100 — but not while the loan is current and performing.

Now let’s break it down clearly.

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 First — Understand the Type of Loan You Have

For COVID EIDL loans under $200,000:

• No personal guarantee required

• UCC lien on business assets only

• If sole prop → lien is on business assets, not your house

• SBA must attempt collection before compromise

So your personal exposure depends on:

• Whether you signed a personal guarantee (most $24k loans did NOT)

• Whether you commingled assets

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 SBA Offer in Compromise (OIC) — How It Actually Works

SBA OIC is different than IRS OIC.

It usually happens after default, not before.

Typical flow:

1. Business closes

2. Loan defaults

3. SBA attempts collection

4. If collection unlikely → SBA considers compromise

If the business has:

• Minimal revenue

• Minimal assets

• No realistic repayment ability

SBA can accept a reduced lump-sum settlement.

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 Important: They Usually Do NOT Compromise Performing Loans

Since you said:

“I’m current on payments.”

That matters.

SBA generally will not reduce:

• Active

• Performing

• Current loans

They view that as a collectible asset.

To even get to compromise territory:

• You’d have to stop paying

• Business would have to shut down

• Loan must enter default status

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 With a $24,100 Loan — What Realistically Happens?

Based on current SBA/Treasury patterns (2024–2026):

If No Personal Guarantee:

• SBA may seize business assets (your $500 worth)

• Close file if no recovery

• May send to Treasury offset (tax refunds)

If Personal Guarantee Exists:

• They pursue personal assets

• Treasury can garnish wages

• Offset tax refunds

But for loans this size:

• Collection cost vs recovery matters

• They often accept 10%–40% lump sum in hardship situations

Example:

$24,100 loan

Possible compromise range: $2,500 – $8,000 lump sum

(Not guaranteed — depends on hardship packet)

⸻

 What Improves Your Chances?

SBA looks at:

 Business officially dissolved

 No meaningful business assets

 No significant personal assets

 Documented hardship

 Financial statement showing inability to pay

They require:

• SBA Form 1150 (Offer in Compromise)

• Personal Financial Statement (if PG)

• Detailed hardship letter

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 Key Strategic Question for You

You are current.

So you have three options:

Option A — Keep Paying

• No damage

• No stress

• No compromise

Option B — Close Business + Stop Paying

• Credit damage likely

• Possible Treasury referral

• Opens door for compromise

Option C — Preemptive Hardship Discussion

Sometimes you can:

• Contact SBA servicing center

• Explain business closure

• Ask about workout options before default

But they usually won’t reduce principal while current.

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 The Big Variable: Personal Guarantee

Confirm this first:

 Check your loan documents:

Was there a personal guarantee?

If no PG:

Risk is much lower.

If yes:

Strategy becomes more nuanced.

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 Real Talk — At $24,100

This is not a $350k EIDL situation.

SBA weighs:

• Cost of legal action

• Staff time

• Treasury processing

• Asset recovery potential

If business income is under $10k gross and assets are $500…

There is a realistic path to compromise after default.

But not while current.

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 Important Tax Angle (CPA hat on)

If they forgive part of the loan:

• It can create cancellation of debt income (COD)

• But insolvency exclusion may apply

• COVID EIDL forgiveness tax treatment can vary by timing

You’d want to plan that carefully.

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Bottom Line

Yes — SBA can compromise a $24k COVID EIDL.

No — they almost never reduce principal on a performing current loan.

If you shut down and default, compromise becomes possible.