EIDL Collections Are Coming: What Every Childcare Center Owner Needs to Know

If you took an EIDL loan to keep your childcare center alive during COVID, you are not alone. Thousands of daycare, preschool, and early childhood education businesses relied on Economic Injury Disaster Loans as a lifeline when enrollment plummeted and shutdowns left them with no revenue. But now, EIDL collections childcare owners hoped would never happen are arriving — and arriving fast.

The Small Business Administration has begun referring delinquent COVID EIDL loans to the U.S. Treasury Department for collection. EIDL loan collections are accelerating nationwide, and childcare center COVID loan obligations that were once manageable on 30-year terms are suddenly being demanded in full. Once that transfer happens, your options shrink dramatically. This article explains exactly what is happening, what it means for your childcare business, and — most importantly — what you can do right now to protect yourself.

The SBA Is Sending EIDL Loans to Treasury Collections — Right Now

Beginning in September 2025, the SBA started referring delinquent EIDL loans to the U.S. Department of the Treasury’s Bureau of Fiscal Service for collection. This is not a future threat. It is already happening at scale.

As reported by 21 Hats in March 2026, citing New York Times data, more than $75 billion in EIDL loans has already been referred to the Treasury Department for collection. The total EIDL portfolio carries an unpaid principal balance of $279 billion.

According to the NFIB Legal Center, under federal law (31 U.S.C. § 3711 and 31 CFR 285.12), federal agencies are required to refer delinquent debts to Treasury once they are between 60 and 180 days past due. For EIDL loans, that transfer typically happens after approximately 120 days of nonpayment.

How EIDL Collections Hit Childcare Centers

Childcare was one of the hardest-hit industries during the pandemic. Centers faced mandatory closures, enrollment drops of 50% or more, and staffing crises that persisted long after reopening. Many took EIDL loans as an emergency measure — not a strategic business decision.

Now, childcare centers face a unique set of vulnerabilities when it comes to EIDL collections:

• Thin operating margins. Most childcare businesses operate on margins of 1–3%. Even a modest monthly EIDL payment can strain cash flow. A 36-month accelerated repayment plan from Treasury is simply unworkable.
• Multiple locations, multiple loans. Owners who operate two or three centers may have taken separate EIDL loans for each. That means multiple debts, multiple collection timelines, and compounding risk.
• Payroll tax exposure. Some childcare owners used EIDL funds to cover payroll during the crisis. If payroll taxes were not fully deposited during that period, they may now face both EIDL collections and IRS payroll tax liability simultaneously.
• Personal guarantees. EIDL loans above $200,000 required a personal guarantee. That means the owner’s personal assets — home, savings, tax refunds — are on the line.

This is not a general small business problem. For childcare center owners, EIDL default can be an existential threat to both the business and the owner’s personal finances. Understanding SBA EIDL Treasury collection procedures is the first step toward protecting your center.

The Timeline: From Missed Payment to Treasury Collections

Understanding the collection timeline is critical. Here is how an EIDL loan moves from delinquent to Treasury enforcement, based on guidance from the SBA’s official EIDL management page:

1. Missed payments begin. The SBA sends demand notices approximately every 30 days via email, direct mail, or through the MySBA Loan Portal.
2. 90 days past due. Your eligibility for SBA’s payment assistance program expires. This is a critical window you do not want to miss.
3. 120 days past due. Your loan enters default status. The SBA refers your debt to Treasury’s Bureau of Fiscal Service — either the Centralized Receivables Service (CRS) for initial billing or the Cross-Servicing Program (CSP) for enforcement.
4. Treasury takes over. The SBA can no longer help you. At all. Your loan is now a federal debt managed by the U.S. Treasury.

As 21 Hats reported, this shift is “happening more often and more quickly, blindsiding business owners.” Many childcare owners do not realize their loan has been transferred until a Treasury demand letter arrives.

What Happens When Treasury Takes Over Your EIDL Loan

Once your EIDL debt is transferred to the Treasury Department, the rules of the game change entirely. This is no longer about helping a small business. It is about recovering federal funds.

Here is what you can expect, according to NFIB’s legal guide on EIDL Treasury collections:

Collection Fees Added Immediately

Treasury adds collection fees of up to 30% of your loan balance. On a $150,000 EIDL loan, that is up to $45,000 in fees added on top of your existing balance — instantly.

Aggressive Collection Actions

• Federal tax refund offsets. Treasury can seize your federal tax refunds through the Treasury Offset Program (TOP).
• Social Security offsets. Portions of Social Security payments can be redirected to repay your debt.
• Wage garnishment. Administrative wage garnishment can be imposed without a court order.
• Credit bureau reporting. The debt is reported to credit bureaus, damaging your personal credit.
• Private collection agencies. Treasury may assign your debt to a private collection agency authorized to communicate with you directly, negotiate agreements, and pursue garnishments.
• Department of Justice referral. In some cases, debts are referred to the DOJ for litigation.

Harsh Repayment Plans

As described by 21 Hats, borrowers are being forced onto 36-month repayment plans. Consider the math: if you could not keep up with a 30-year repayment schedule, you will not be able to repay everything — plus 30% in penalties — in three years. For most childcare owners, these plans are simply impossible.

No Path Back to SBA

This is the detail that surprises most borrowers. The Treasury’s Bureau of Fiscal Service has explicitly stated: Treasury cannot return COVID EIDL debts back to the Small Business Administration. Once your loan is with Treasury, you cannot go back to SBA for help, renegotiation, or relief. The transfer is permanent. For any childcare business facing EIDL default, this reality makes early action essential.

Closing Your Childcare Center Does NOT Eliminate Your EIDL Debt

This is one of the most dangerous misconceptions among childcare owners. Many center operators who closed during or after COVID assumed the debt would simply go away with the business. It does not.

EIDL loans over $200,000 include a personal guarantee. That means:

• You are personally liable for the remaining balance, even if the business no longer exists.
• Treasury will pursue your personal assets — tax refunds, wages, Social Security benefits — regardless of whether your childcare center is still operating.
• There is no statute of limitations on federal debt collection through offsets. The government can pursue this debt indefinitely.

As Protect Law Group warns, “many borrowers mistakenly believe enforcement will not affect them — especially if their business closed during COVID.” In reality, SBA has resumed file reviews and enforcement proceeds regardless of business status.

If you closed your childcare center and have an outstanding EIDL loan, you still need to act.

EIDL Collections Childcare Owners Can Still Prevent: 6 Steps to Take Now

The good news is that if your loan has not yet been transferred to Treasury, you still have options. Even if it has been transferred, there are steps you can take. Here is your action plan:

Step 1: Check Your Loan Status Immediately

Log in to the MySBA Loan Portal and check the current status of your EIDL loan. Is it current? Delinquent? Charged off? This is the single most important thing you can do today.

Step 2: Contact the SBA Before It Is Too Late

If your loan is still with the SBA (not yet transferred to Treasury), reach out now. Email for general COVID-EIDL assistance or for servicing requests. Always include your loan or application number in the subject line, along with your business name, applicant name, and contact information.

Step 3: Apply for EIDL Payment Assistance

The SBA offers a one-time payment assistance program that can reduce your monthly payments by 50% for six months. This EIDL payment assistance is especially critical for childcare businesses operating on razor-thin margins. You can apply through the MySBA Loan Portal. Eligibility requirements include:

• Loan must be less than 90 days past due at the time of the request
• Loan must not be in Charged Off or Uncollectible status
• Business must be actively open and operating
• No active bankruptcy proceedings for the borrower or any owners
• Financial difficulty must be temporary, not long-term

Important: Interest continues to accrue during the reduced payment period, and this program is available only once every five years. But it can buy you critical breathing room to stabilize your cash flow.

Step 4: If Already in Treasury Collections, Contact Treasury Directly

If your loan has already been transferred to Treasury, you need to work with them — not SBA. Contact the following, per the Bureau of Fiscal Service:

• Cross-Servicing Call Center: 1-800-289-7388 (Monday–Friday, 7:30 AM – 4:30 PM Central Time)
• Debt Recovery Analyst: 1-888-826-3127 (to confirm your debt and discuss payment or dispute options)
• Mailing address: U.S. Department of the Treasury, P.O. Box 830794, Birmingham, AL 35283-0794

When speaking with Treasury, ask which program is managing your debt — CRS, Cross-Servicing, or TOP — as each has different procedures and options. If you are in the CRS stage, you may still have the ability to negotiate a payment plan before further escalation.

Step 5: Contact Your Local SBA District Office

Your local SBA district office can provide guidance, connect you with free counseling through SCORE chapters, Small Business Development Centers (SBDCs), or Women’s Business Centers. These SBA Resource Partners offer free or low-cost financial counseling specifically for small business owners navigating situations like this.

Step 6: Reach Out to Your Member of Congress

If you believe your situation involves legitimate hardship — particularly if you have been unable to get a response from SBA or Treasury — consider contacting your U.S. Representative or Senator’s office. Congressional inquiries can sometimes expedite reviews and ensure your case receives attention.

Bankruptcy and EIDL Debt: What Childcare Owners Should Know

Some childcare center owners may be considering bankruptcy as a way to address overwhelming EIDL debt. Here is what you need to understand:

• Filing for bankruptcy triggers an automatic stay. This means all collection actions — including Treasury enforcement — must pause while the bankruptcy case is active.
• You must notify Treasury immediately. If you file for bankruptcy and are subject to an automatic stay, inform the Treasury Bureau of Fiscal Service right away so they can cease collection actions.
• Bankruptcy may not fully discharge EIDL debt. Depending on the type of bankruptcy and your specific circumstances, the EIDL loan may or may not be dischargeable. This is a complex legal question that requires professional counsel.

Bankruptcy is a serious step with long-term consequences. Do not pursue it without consulting both a qualified attorney and your CPA.

Professional Resources for Childcare Centers Facing EIDL Collections

You do not have to navigate this alone. Here are professionals who specialize in helping business owners with SBA EIDL debt:

Legal Representation

Frost Law — Tax attorneys specializing in SBA EIDL debt relief. They provide nationwide representation and are authorized to represent federal debtors before the SBA, Treasury Department, and Bureau of Fiscal Service. They can negotiate payment plans, loan deferments, and represent you in bankruptcy proceedings. Contact them at (410) 497-5947 for a case evaluation.

Protect Law Group — SBA attorneys who focus exclusively on SBA debt resolution and federal non-tax debt collection defense. They have represented thousands of small businesses and have resolved millions of dollars in SBA and Treasury debts through Offers in Compromise and negotiated repayment agreements. Contact them at (833) 428-0937 for a free case evaluation.

Educational Resources

NFIB Legal Center — The National Federation of Independent Business has published a detailed legal guide on navigating EIDL loans and Treasury collection efforts. It is one of the most comprehensive resources available and is free to access. For additional questions, contact them at .

Free Counseling

SBA Resource Partners — Free or low-cost business counseling is available through your local SCORE chapter, Small Business Development Center, or Women’s Business Center. These advisors can help you think through your options and create a plan — at no cost.

How Honest Buck Accounting Helps Childcare Centers Navigate EIDL Collections

At Honest Buck Accounting, we work exclusively with childcare centers nationwide. We understand the financial realities of running a daycare, preschool, or early childhood education business — the thin margins, the staffing costs, the constant balancing act between tuition revenue and operating expenses.

When it comes to EIDL collections, here is how we help:

• Financial health assessment. We review your complete financial picture — not just the EIDL loan — to understand where you stand and what you can realistically afford.
• Cash flow planning. We build a cash flow plan that accounts for your EIDL payment obligations alongside your day-to-day operating costs, helping you find a sustainable path forward.
• Coordination with legal counsel. If you need an attorney to negotiate with SBA or Treasury, we work alongside your legal team to provide the financial documentation and analysis they need to build your case.
• Payroll tax review. If you used EIDL funds for payroll, we check for any outstanding payroll tax exposure and help you address it before it compounds the problem.
• Long-term strategy. Whether you are trying to save your center, sell it, or wind it down responsibly, we help you make that decision with clear financial data — not fear.

We are not attorneys, and we do not provide legal advice. But we are the financial partner who makes sure you understand your numbers before you make any decisions about your EIDL debt.

Do Not Wait: Take Action on Your EIDL Loan Today

The window for EIDL collections childcare center owners to act is closing. Every day that passes without action brings you closer to Treasury referral — and once that happens, your options are fewer, your costs are higher, and the process is far more aggressive.

Here is the reality: the SBA’s payment assistance program, the ability to negotiate directly with SBA, the chance to get your loan reinstated from charged-off status — all of these options disappear once Treasury takes over.

If you are a childcare center owner with an EIDL loan and you are behind on payments — or even if you are just unsure of your status — take these three steps today:

1. Log in to the MySBA Loan Portal and check your loan status.
2. Email the SBA at with your loan number in the subject line.
3. Schedule a consultation with Honest Buck Accounting so we can review your financial situation and help you build a plan — before your options disappear.

You kept your childcare center alive through the worst of COVID. Let us help you protect it now.

Contact Honest Buck Accounting today →