Many of the PPP and EIDL loans that were issued prior to June 5, 2020, had a maturity date of two years, which means in mid-2022 many lenders, for loans that were not forgiven, will be facing questions of how to deal with defaulting borrowers or borrowers entering bankruptcy. What obligations does a lender have when their PPP or EIDL borrower has defaulted or filed for protection under the Bankruptcy Code? Treatment of PPP Loans in Bankruptcy: While PPP loans largely did not require collateral or personal guarantees, some EIDL Loans did. In fact, EIDL loans of more than $25,000 required collateral, and EIDL loans greater than $200,000 required personal guarantees. Generally speaking, PPP and EIDL loans are eligible for inclusion in a business bankruptcy case. PPP and EIDL loans will be treated in bankruptcy according to their security and priority like a typical loan. This means, for most borrowers, a PPP loan is likely to be treated as unsecured debt that can be eligible for discharge.