The U.S. Small Business Administration (SBA) is providing a financial reprieve to small businesses during the COVID-19 pandemic.
Last week, APCA provided information on the CARES Act and the nearly $350 billion it allocated to support emergency loans to qualifying businesses through the Paycheck Protection Program. The Act also includes $17 billion to subsidize existing small business loans.
The following information is provided by SBA.
As part of SBA's debt relief efforts, it will:
- Automatically pay the principal, interest, and fees of current 7(a), 504, and microloans for a period of six months.
- Automatically pay the principal, interest, and fees of new 7(a), 504, and microloans issued prior to September 27, 2020.
- Additional Debt Relief
For current SBA Serviced Disaster (Home and Business) Loans: If your disaster loan was in “regular servicing” status on March 1, 2020, the SBA is providing automatic deferments through December 31, 2020.
- What does an “automatic deferral” mean to borrowers?
- Interest will continue to accrue on the loan.
- 1201 monthly payment notices will continue to be mailed out which will reflect the loan is deferred and no payment is due.
The deferment will NOT cancel any established Preauthorized Debit (PAD) or recurring payments on your loan. Borrowers that have established a PAD through Pay.Gov or an OnLine Bill Pay Service are responsible for canceling these recurring payments. Borrowers that had SBA establish a PAD through Pay.gov will have to contact their SBA servicing office to cancel the PAD.
- Borrowers preferring to continue making regular payments during the deferment period may continue remitting payments during the deferment period. SBA will apply those payments normally as if there was no deferment.
- After this automatic deferment period, borrowers will be required to resume making regular principal and interest payments. Borrowers that cancelled recurring payments will need to reestablish the recurring payment.
If you have questions about your current loan and whether or not your loan is automatically deferred, contact your Loan Servicing Office directly using the following information:
Birmingham Disaster Loan Servicing Center:
El Paso Disaster Loan Servicing Center:
You can also find an excellent discussion of SBA loan programs at www.natlawreview.com/article/existing-sba-loans-sba-will-make-your-payments-six-months.