- SBA promises further debt relief assistance under newly passed stimulus legislation
- $3.5 billion dedicated to providing relief on principal, interest, and fees on a variety of SBA loans
- SBA has made more than $7.1 billion in debt relief payments since last spring
The U.S. Small Business Administration says it is “working expeditiously” to implement new assistance through a debt relief program for small businesses after this authority was extended under a recent stimulus bill.
Under the CARES Act passed last spring, the SBA was granted funding and the authority to make principal, interest, and fee payments on the administration’s 7(a), 504, and Microloan programs. Since April, the SBA has made more than $7.1 billion in debt relief payments over approximately 1.8 million.
The SBA says it is currently determined how much additional relief will be possible, and will be posting further guidance shortly.
The stimulus package appropriates $3.5 billion for SBA debt relief. The legislation establishes that borrowers with qualifying loans guaranteed by the SBA prior to the CARES Act can receive three additional months of principal and interest, starting in February 2021. Underserved borrowers will receive an additional five months after that point, with these borrowers including 7(a) Community Advantage Loans, Microloans, and those in sectors that have been hard-hit by the COVID-19 pandemic including food service and accommodations.
SBA payments on principal and interest on the first six months of newly approved loans will resume for all loans approved between Feb. 1 and Sept. 30. All debt relief payments are capped at $9,000 a month.
The program includes some restrictions, such as a requirement that payments only be made once a loan is fully disbursed and limiting debt relief to one post-CARES loan per applicant or business. The SBA may also establish a minimum loan maturity period, and has the option of reducing the number of months in each extension if it determines that funds are not sufficient for the approved extension.
