SBA Debt Relief - Great News if You Can Get Your Loan Closed in Time

Over the past several weeks, we have faced unprecedented business interruptions in the wake of the coronavirus pandemic. In response, the CARES Act was passed to provide fast and direct economic assistance for American workers and their families, as well as existing small businesses.

As part of the coronavirus debt relief efforts, the SBA announced a loan payment assistance program. If your business already has an SBA loan in place, with the first payment due after March 27th, 2020, OR you are a new borrower and can close your SBA loan and be in regular loan servicing on or before September 27th, 2020, the SBA will make your first six payments.

Here Are the Specifics:

• SBA will pay six months of principal, interest, and any associated fees owed for all current 7(a), 504, and Microloans in regular servicing status, as well as new 7(a), 504, and Microloans, disbursed before September 27th, 2020.
• No application is required. Payments will automatically be provided as follows:
  • For loans not on deferment, SBA will begin making payments with the next payment due on the loan and will make six monthly payments.
  • For loans currently on deferment, SBA will start making payments with the next payment due after the deferment period has ended, and will make six monthly payments.
  • For loans made after March 27th, 2020 and fully disbursed before September 27th, 2020, SBA will begin making payments with the first payment due on the loan and will make six monthly payments.
• Loan must be in regular servicing to receive the payments, meaning the full, approved loan balance must be completely disbursed, requiring full principal and interest payments.

How Can New Borrowers Take Advantage of the Payment Relief?

For businesses that already have SBA loans in place that meet the criteria, there is nothing you need to do other than enjoy the benefit of having your loan paid for six months.

On the other hand, for new businesses that do not yet have an SBA loan, you will need to hustle to beat the September 27^thdeadline. It is imperative to remember your loan must be closed and fully disbursed, not just approved by this date. If your loan includes any construction and/or large equipment purchases, this means both must be complete and fully paid. So, if you intend to take advantage of the six-month payment relief, make sure you understand what it will take to get your loan closed promptly.

If you are considering business ownership, schedule a free consultation so our team of funding experts can help you determine the best strategy to get the capital you need.