If you are a small business that has a bank loan through the Small Business Administration, a letter has begun circulating to borrowers that the SBA debt relief program will continue this year. That is welcome news to more than 1.8 million small businesses that did not have to make loan payments last year.
According to its website, the SBA debt relief program made more than $7.1 billion in payments in 2020, and those payments will continue through much of this year. If you’re a small business that has an outstanding loan with a certified SBA lender, there is nothing you need to do to ensure your loan is paid.
Small business is big business in America, and this Administration will continue to extend a lifeline to small business owners during this critical time.
In a story published on GlobalNewsWire, the head of SBA said the program is being implemented right now.
“Small business is big business in America, and this Administration will continue to extend a lifeline to small business owners during this critical time. Congress charged the SBA with making debt relief payments (principal, interest and fee payments) under Section 1112 of the CARES Act to help borrowers in SBA’s 7(a), 504 and Microloan programs; and now SBA is working expeditiously to implement the newly enacted assistance,” said former SBA Administrator Jovita Carranza.
Under the Biden Administration, the program has continued. Isabel Guzman has been chosen to run the SBA.
Complete information on SBA debt relief
Below is the full text of the release from the SBA on its debt relief program:
As a part of the CARES Act, SBA is authorized to pay 6 months of principal, interest, and any associated fees that borrowers owe for all 7(a), 504, and Microloans reported in regular servicing status (excluding PPP loans). This debt relief to borrowers was originally dependent on the loan being fully disbursed prior to September 27, 2020 and does not apply to loans made under the Economic Injury Disaster Loan (EIDL) program.
These original provisions were amended on December 27, 2020 through the Economic Aid to Hard-Hit Small Businesses, Non-Profits and Venues Act (Economic Aid Act). The Economic Aid Act revised the eligibility criteria for assistance to include all 7(a), 504, and Microloans approved up to September 27, 2020 even if not fully disbursed. All other provisions for initial debt relief remained the same.
Borrowers need not apply for this assistance. SBA provides this assistance automatically as provided below:
- For loans not on deferment, SBA will make monthly payments based on the next payment due on eligible loans for a total amount equivalent to no more than 6 months of installment payments.
- For loans currently on deferment, SBA will begin making monthly payments with the first payment due after the deferment period ends for a total amount equivalent to no more than 6 months of installment payments.
SBA has notified 7(a), 504, and Microloan Lenders that it will pay these borrower loan payments. Lenders are to report to SBA periodically on the amounts due once a loan is fully disbursed. Payments collected after March 27, 2020 may be applied to the outstanding loan balance or returned to the borrower at the borrower’s discretion.
Jonathan McElvy is the CEO of McElvy Partners. His company includes the Greensheet, The Leader, Fort Bend Star, Charlotte Media Group, Coastal Bend Publishing and Texas Printers. He has managed and owned small businesses for 20 years. If your business would like to talk more about your individual needs, click HERE for contact information. You can follow him on Twitter @mcelvy.