Many small business owners are getting some much-needed financial help, thanks to an SBA loan debt relief program that was enacted to mitigate the damage caused by the COVID-19 crisis. While the impacts of the pandemic are ongoing, it’s clear that small businesses have been especially hard hit. According to the National Bureau of Economic Research, the number of active business owners in the US dropped by 3.3 million or 22% from February to April 2020 – the largest such drop ever recorded.
Since 1953, the SBA has worked to ignite change and spark action so small businesses can confidently start, grow, expand, or recover. And now their mission is more important than ever.
On March 27, 2020, the SBA introduced a debt relief program to extend a helping hand to everyone who currently has an SBA loan. According to the SBA:
“As part of our coronavirus debt relief efforts, the SBA will pay 6 months of principal, interest, and any associated fees that borrowers owe for all current 7(a), 504, and Microloans in regular servicing status as well as new 7(a), 504, and Microloans disbursed prior to September 27, 2020.”
Best of all, borrowers don’t have to do anything to receive this relief – it is automatically applied! For existing loans and new loans that were disbursed prior to Sept. 27th, the SBA pays the next/first payment due on your loan and continues to make payments over the next six months. If your loan has been deferred, the SBA will start making payments after the deferment period has ended. Lenders were instructed to refrain from collecting loan payments from borrowers while the SBA is making relief payments. If you have questions about this relief, contact your lender.
Hopefully, your small business was able to benefit from this program. However, while those who are now applying for an SBA loan have missed the deadline to be eligible for this relief, there is still a chance that the program may be reenacted or extended in the future, or that upcoming government relief packages may offer similar assistance to small businesses. So, keep an eye out for the next Act passed by Congress.
In the meantime, if you don’t currently have an SBA loan, but could use some help during this challenging time, we’d love to talk to you about how an SBA 504 loan can benefit you if you want to purchase fixed assets such as real estate, machinery, or equipment. We’re in the business of helping small businesses like yours succeed. Contact us to learn more.
Sunshine State Economic Development Corporation (SEDCO) is a not-for-profit certified development corporation (CDC) licensed by the U.S. Small Business Administration to offer the SBA 504 Loan Program throughout the state of Florida. SEDCO can provide your expanding small business with alternative financial resources, sound financial advice, and business acumen. Helping small business succeed is our business. For more information, visit our website or contact us.