The events of the past few months have thrown businesses into new and uncertain circumstances. For most of us, it won’t be “business as usual” for quite awhile. We don’t know what the upcoming months hold for us, but we appreciate the assistance offered to businesses to help them remain open and even successful during the ongoing COVID-19 crisis. One helpful program is an effort to offer debt relief to affected small businesses.
Recently $17 billion was allocated under the Coronavirus Aid, Relief, and Economic Security (CARES) Act to subsidize loan repayments for any small businesses affected by COVID-19. Under their Debt Relief Program, the Small Business Administration (SBA) will cover loan payments including principal, interest, and fees of new and existing loans for six months. Further, the SBA will encourage lenders to provide payment deferments in certain situations.
How to Get Debt Relief:
- Debt relief is automatic for all eligible SBA loans. The SBA is directed to make payments within 30 days of the date on which the first payment is due
- You should check with a local SBA lender for additional details
Eligible Types of Loans:
- Eligible loans include new and existing 7(a) loans, 504 loans and microloans
- Ineligible loans include Paycheck Protection loans and Economic Injury Disaster Loans, as payments are already deferred for these loans
Six Month Payment Period:
- For existing loans made before the date the CARES Act was enacted (March 27, 2020), the 6-month period begins with the next payment due on the loan
- For existing loans on deferment, the 6-month period begins after the deferment ends
- For new loans made between March 27, 2020 and September 27, 2020, the 6-month payment begins on the first payment due on the covered loan
- The SBA is required to encourage lenders to provide payment deferments, when appropriate
- The SBA is also required to encourage lenders to extend maturity of loans, so as to avoid balloon payments or any requirement for increase in payments resulting from deferments
The federal government, along with many state and local governments are offering a variety of support options to help businesses navigate the next few months. The ongoing recovery from the effects of the coronavirus will take time, but with help like this, it can be done. We encourage businesses to take advantage of every assistance you can, including this debt relief program. If we can possibly be of any help, please contact us.