Debt Relief beyond the PPP – Loans Eligible for the SBA to make Six Months of Payments

Aside from the Paycheck Protection Program, are you aware of the other small business relief program created by the CARES Act? Under the Debt Relief Program, the SBA will automatically be making six months’ worth of payments on eligible loans, including existing loans and any new loans taken out prior to September 27, 2020.

For anyone considering a business acquisition, now may be a great time to do it. Many buyers finance business acquisitions using 7(a) loans. With six months of loan payments being paid by the SBA, there is a high incentive to pursue one of these loans prior to September 27^th. The financing packages available under a 7(a) loan often include plenty of working capital.

Which loans are eligible for the Debt Relief Program?

7(a) loans*, 504 loans, and microloans (“Covered Loans”)

*Debt relief under this program will not apply to a PPP loan. Disaster loans are not eligible either.

	Covered Loans made before March 27, 2020	Covered Loans made between March 27, 2020 and September 27, 2020
Benefit	SBA will pay the principal, interest, and any associated fees for 6 months	SBA will pay the principal, interest, and any associated fees for 6 months
Timing of Benefit	For the 6-month period beginning with the next payment due on the covered loan	For the 6-month period beginning with the first payment due on the covered loan

7(a) Loan
What is it?	How to Apply
A loan product of up to $5 million for borrowers who lack credit elsewhere and need access to versatile financing: -       short-term or long-term working capital -       finance purchase of an existing business -       refinance current business debt, or -       purchase furniture, fixtures, and supplies	There are many different types of 7(a) loans, you can visit this site to find the one that’s best for you. You apply for a 7(a) loan with a bank or a mission-based lender.

504 Loan
What is it?	How to Apply
The 504 Loan Program provides loans of up to $5.5 million to approved small businesses with long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization. It is a good option if you need to purchase real estate, buildings, and machinery.	You apply through a Certified Development Company, which is a nonprofit corporation that promotes economic development. SBA has a free referral service tool called Lender Match to help find a lender near you.

Microloan[PM1]
What is it?	How to Apply
The Microloan Program provides loans up to $50,000 to help small businesses and certain not-for- profit childcare centers to start up and expand. The average microloan is about $13,000.	These loans are delivered through mission-based lenders who are also able to provide business counseling.

Madeline Person, Attorney (NC)