Congress is moving forward on a long-awaited new round of stimulus efforts, which include additional funding for SBA programs. Here is a brief review of the key information:
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Six months of payment relief (P&I payments made by the SBA, referred to as “Section 1112 payments”) will be available for new SBA 7(a) loans.
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7(a) borrowers that were eligible for previous CARES act relief payments will receive an additional three months of P&I payments beginning in February 2021 (capped at $9,000/month). The smallest and hardest-hit businesses may be eligible for an additional five months of P&I payments after the three-month period is over.
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All Section 1112 payments are considered non-taxable income. This provision is retroactive starting with the enactment of the CARES act
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The guarantees on SBA 7(a) loans will be increased to 90% until 30, 2021, and lender and borrower fees will be waived.
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SBA Express Loan amounts are increased from $350,000 to $1 million until Sept. 30, 2021, and guarantees are temporarily increased to 75% for loans under $350,000. Beginning Oct. 1, 2021, the amount is permanently increased to $500,000 and guarantees return to 50%.
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The Paycheck Protection Program will be reopened with an additional $284 billion in funding and expanded criteria. As previously for PPP loans, we are asking lenders to underwrite and submit their own PPP applications through E-Tran.
Please contact our experienced SBA lending team if you need support with SBA 7(a) loans in 2021.
