Covid 19 Relief Bill Information
Congress has passed a $900 billion COVID relief package combined with the $1.4 trillion governmentwide funding under the 2021 Consolidated Appropriations Act. Below, you will find highlights from the bill and key information released by the SBA pertaining to the second round of debt relief payments made by the SBA, which will include principal, interest, and fees for qualifying 504 and Community Advantage borrowers, 504 Debt Refinance Fixes and Improvements, Temporary Fee Elimination for the 504 program, and more.
GUIDANCE FOR 2ND ROUND OF SBA DEBT RELIEF
On February 16th, the SBA released a notice that announced that the $3.5 billion allocated for relief benefits is insufficient to make all payments for the periods originally authorized and, accordingly, has developed an Adjustment Plan to proportionally reduce the number of months of 1112 payments for each category of eligible 504 and 7(a) loans. The Adjustment Plan is effective immediately.
A flowchart release by NADCO that shows the full outline of adjusted dates and payments can be seen here.
All 2nd ROUND relief payments will be capped at $9,000 per loan per month.
The borrower is responsible for the excess amount due for any monthly payment that exceeds $9,000. Borrowers will need to submit these payments to the CSA via wire or check. See the link at the bottom for instructions.
For Qualifying loans SBA has authorized prior to the CARES Act (March 27, 2020)
- 504 borrowers will receive 2 months of payments starting February 1, 2021.
- SBA 504 loans will receive an additional 3 months (after 2 months) only if the business is considered a “hard hit” business by the SBA. The SBA will determine “hard hit” businesses if they have NAICS codes starting with: 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812.
- SBA 504 loans currently on deferment will receive 2 months of payments after the deferment period.
Community Advantage Loans
- Community Advantage loans will receive 5 months of payments starting February 1, 2021.
- Community Advantage loans currently on deferment will receive 5 months of payments after the deferment period.
For 504 and Community Advantage Loans SBA has authorized during February 1, 2021 and September 30, 2021
- 504 loans and Community Advantage loans will receive 3 months of payments beginning with the first payment after the loan is fully funded and moves into **regular servicing status.
For 504 Loans SBA has authorized during March 27, 2020 and September 27, 2020
- If fully funded on or before September 27th, 2020: SBA will make 6 months of Round 1 payments and no Round 2 payments.
- If fully funded on or after September 28, 2020: SBA will make 3 months of Round 1 payments and no Round 2 payments.
- One-Loan Limitation – Any borrower who has received relief payments on a loan *approved during this time may not receive relief payments for any other loan approved beginning on or after February 1, 2021. This limit does not apply to affiliates of the borrower.
For 504 and Community Advantage Loans SBA has authorized during September 28, 2020 and January 31, 2021
- No payments will be made for 504 loans and Community Advantage loans.
- Lenders are prohibited from canceling a loan *approved during this period and resubmitting a loan for a similar purpose on or after February 1, 2021 in order to obtain relief payments for the Borrower. Lenders are also prohibited from refinancing a loan on or after February 1, 2021 that was *approved beginning on September 28, 2020 and ending on January 31, 2021 in order to obtain relief payments for the Borrower.
504 Debt Refinancing Fixes and Improvements
The legislation repeals limitations and creates substantial improvements on 504 debt refinancing including the cap on a CDC’s refinance loan volume.
May include the refinance of government-guaranteed debt.
- May allow the refinance of a Qualified Debt that is 6 months old (down from 2 years).
- The refinance of Third Party Lender loans in an existing 504 project may be allowed to include cash-out for business operating expenses to assist small businesses leverage existing equity capital to fund business operating and recovery expenses.
504 Express Loan Program for Accredited Lenders
The legislation may grant special CDCs, such as dakota BUSINESS finance, with express loan authority to approve, authorize, close, and service 504 loans up to $500,000 to speed critical access to capital to small businesses.
Temporary Fee Elimination for the 504 Loan Program
The legislation may eliminate the 0.5% SBA Participation Fee and the 1.5% CDC Processing Fee in debenture pricing for all loans approved from the date of enactment of the Act and ending on September 30, 2021.
Helpful Sites and Links
*approved means SBA has authorized the loan.
**regular servicing status occurs when the loan has been closed and the final loan disbursement has been made.
***These are the SBA Guidelines effective February 16, 2021. Updates will be provided as more is known. If you have questions, please contact your Loan Officer.