EIDL: Why Do I Owe More Than My Loan Amount

15 Nov 2025 · 3 min

Watch on YouTube

3:25

Donna Genie explains why your EIDL balance grew after your first payment. Interest accrued during the 20-month deferment period at 3.75% for businesses, so your initial payments go entirely toward interest, not principal. She shows how to calculate monthly accrued interest and recommends consulting a CPA before deciding whether to pay it off early.

Questions this video answers

3.75% for most businesses; 2.75% for nonprofits.

Multiply the loan amount by the annual rate and divide by 12 (loan × rate ÷ 12).

Chapters

I received a question from a listener yesterday that I thought everyone would be interested in. She's beginning to make payments on her Eidl loan and logged into the portal after the first payment was made and saw that the balance was more than the original loan amount and her whole payment was allocated to interest. All right, let's talk about why the Eidl loan did accrue interest during the deferment period. The deferment period was that 20 months where you didn't have to make a payment. So it has been accruing. Interesting. That interest for most people was 3.75% interest. If you were a nonprofit, that rate decreased to 2.75%. So if you take your loan amount and multiply it times.0375 and divide that by 12, that tells you how much interest was accruing each month during the deferment period. So since you've been accruing all of this interest along the way, it's going to take quite some time before your payments begin to have any effect on the principal of the loan. The balance of the loan will only decrease after you begin making payments enough to replace all of that interest all along the deferment period. So the follow up question to that then is should I take a big chunk of money and just pay down the interest so I can start making principal payments? Well, you could, but let's talk about what that means. You took that loan probably for a reason. Now, if you don't need it at all and don't want to have any interest and you have no other debts in your business, you may want to consider paying it off early or making a bigger principal payment. But for most businesses, 3.75% interest is pretty darn good and you probably have debt that's higher than that for something else. So if you're going to make a principal payment to something, make sure it's a smart payment and you're paying off the highest interest rate you have, as long as that makes good sense with your full debt payoff plan. So if you have questions about paying off the debt or other potential strategies to get to more principal being paid off, I'd suggest strongly that you talk with your CPA if you're in need of one. Hey, I'm here to help. We may be able to work with your business to help you employ some strategies to reduce your debt and better yet, grow your business and minimize taxes. We want to be along with people on that journey to see their full potential. Make sure you subscribe to our YouTube channel where we continue to answer questions about the Eidl loan. Please follow us on Facebook and Instagram. Please make sure to check out our blog and our website linked below. Subscribe to our YouTube channel and hit the bell to be notified when we post. You can email me@donnaampgroundaccounting.com.