The SBA (Small Business Association) is leading the effort to provide immediate relief to the nation’s small businesses throughout the COVID-19 crisis. The country’s small businesses are facing an unprecedented economic crisis due to the Coronavirus (COVID-19) outbreak. In March of 2020, the President signed into law the CARES Act, which contains $376 billion in relief for American workers and small businesses. The SBA is responsible for administering and overseeing the relief efforts for small businesses.
There are four primary programs that are being administered by the SBA as part of its COVID-19 relief.
Paycheck Protection Program – This loan program provides loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7(a) loan program.
EIDL – This loan will provide critical economic relief to small businesses and non-profit organizations that are experiencing a temporary loss of revenue.
SBA Express Bridge Loans – These loans enable small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly.
SBA Debt Relief – The SBA is providing a financial reprieve to small businesses during the COVID-19 pandemic.
SBA Loan Program Updates – August 2020
As part of the SBA’s coronavirus debt relief efforts, they have announced that they will pay 6 months of principal, interest, and any associated fees for all current 7(a), 504, and microloans which are in regular servicing status as well as any new 7(a), 504, and Microloans that were put in place prior to September 27, 2020.
This relief is not available for Paycheck Protection Program loans or Economic Injury Disaster loans. Small business owners carrying these loans will not need to apply for this assistance. The assistance will be provided automatically 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 begin making payments with the next payment due after the deferment period has ended, and will make six monthly payments.
- For loans made after March 27, 2020 and fully disbursed prior to September 27, 2020, SBA will begin making payments with the first payment due on the loan and will make six monthly payments.
SBA has notified 7(a), 504 and Microloan Lenders that it will pay these borrower loan payments. Lenders have been instructed to refrain from collecting loan payments from borrowers. If a borrower’s payment was collected after March 27, 2020, lenders were instructed to inform the borrower that they have the option of having the loan payment returned by the lender or applying the loan payment to further reduce the loan balance after SBA’s payment.
Borrowers should contact their lender if they have any questions regarding this payment relief.
Additional Debt Relief (*Updated from SBA News Release)
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.
Automatic Deferral – What it means to your small business
- 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.
About Small Business Funding and SBA Loans
Small Business Funding offers SBA Loans as one of the many lending options available to our customers. Some parameters of our SBA Loan program are listed below:
An SBA Working Capital Loan has been referred to as the “gold standard” of loan options for small business owners. It is a government-backed loan that is partially guaranteed by the Small Business Administration (SBA), an agency of the federal government.
While these loans are harder for small business owners to qualify for due to more stringent requirements as listed below, they are truly one of the best options for those businesses looking to refinance debt, hire employees, purchase equipment, or just looking to expand.
Timing: Pre-Qualification can happen in minutes. Assuming you pass initial requirements and secure a pre-approval, expect funding to take approximately 4 weeks, and could take longer.
Requirements: 2+ years in business, verified through two complete tax returns; minimum personal FICO of 650 for ownership; you’ll need to supply business financial statements including Profit & Loss, Balance Sheet and potentially other documents as deemed necessary.
Process: Submit your company’s 3 most recent months of business banking history along with our easy online application to find out if you qualify – your dedicated SBF Funding Manager will take it from there!
Approval Amounts: $30,000 to $350,000
Repayment Terms: 10-year term, monthly payments. APR (Annual Percentage Rate) = 6.00% – 7.00% (Prime Rate + 2.75% to 3.75%)
Note: Small Business Funding is a private, independently-owned funding source, and is in no way affiliated with the SBA. However, through partnership with SBA-affiliated funding sources we are able to provide our clients access to several standard SBA loan products.