CORONAVIRUS PHASE III RELIEF – SBA 7(A) BORROWERS

On March 27, the House of Representatives passed the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. This legislation included many provisions intended to improve cash flow for taxpayers impacted by the COVID-19 pandemic. One such provision is relief for borrowers of existing and new Small Business Administration (SBA) 7(a) loans.

Key Provisions Include:

• The CARES Act provides six months of payments for all SBA 7(a) borrowers – existing and new.  The payments are principal and interest to the lender for which the borrower will never be responsible for again. SBA is required to make these payments beginning with the next payment due on the loan after the CARES bill is enacted.

Eligibility:

• Any loan made under the 7(a) program, including Express, Microloan and Community Advantage loans.  Note: loans made under the new SBA Paycheck Protection Program are not eligible to receive payments.

 Payment Relief Scenarios:

• Existing borrower not currently on deferment: six months of payments of principal, interest and any associated fees beginning with the next payment due on the loan;
• Existing borrower currently on deferment: six months of payments of principal, interest and any associated fees beginning with the next payment due on the loan after the deferment period;
• New borrower: six months of payments of principal, interest and any associated fees beginning with the first payment due on the loan, but only for new loans made within the first six months starting from the date of enactment (3/27/2020). End date – loans issued through September 27, 2020.

NOTE –  The provision of the CARES Act state that these payments shall be made by the SBA on behalf of the borrower beginning with the next payment due on the loan after the bill is enacted (3/27/20); however the SBA has not yet provided guidance on this as of 3/31/20.

Please contact us with questions regarding how this credit can benefit your business.