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Small Business Administration lists COVID aid options

 

Staff and wire

The U.S. Small Business Administration has listed several programs created through the CARES Act to aid small businesses dealing with the COVID-19 pandemic.

The CARES Act contains $376 billion in relief for U.S. workers and small businesses, the SBA COVID-19 Coronavirus Relief Options webpage says, and established several new temporary programs to help businesses address the COVID-19 outbreak.

Paycheck Protection Program

The Paycheck Protection Program, which Congress continues to update, provides loan forgiveness for retaining employees by temporarily expanding SBA's 7(a) loan program.

The program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.

SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest or utilities.

Businesses can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating, SBA says on the site. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. Businesses should consult with their local lender as to whether it is participating in the program, the page says.

EIDL

The Economic Injury Disaster Loan emergency advance provides up to $10,000 of economic relief to businesses experiencing temporary difficulties, the site says.

The program was adjusted to allow for agricultural businesses to apply as well.

In response to the COVID-19 pandemic, small business owners in all U.S. states, Washington, D.C., and territories were able to apply for an Economic Injury Disaster Loan advance of up to $10,000. This advance is designed to provide economic relief to businesses that are experiencing a temporary loss of revenue. This loan advance will not have to be repaid. 

SBA will begin accepting new Economic Injury Disaster Loan and EIDL Advance applications on a limited basis only to provide relief to U.S. agricultural businesses, the page says.

The new eligibility is made possible as a result of the latest round of funds appropriated by Congress in response to the COVID-19 pandemic.

• Agricultural businesses includes those businesses engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural related industries - as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b).

• SBA is encouraging all eligible agricultural businesses with 500 or fewer employees wishing to apply to begin preparing their business financial information needed for their application.

At this time, the page said Wednesday, only agricultural business applications will be accepted due to limitations in funding availability and the unprecedented submission of applications already received. Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis. For agricultural businesses that submitted an EIDL application through the streamlined application portal prior to the legislative change, SBA will process these applications without the need for re-applying.

Express Bridge Loans

SBA Express Bridge Loans enable small businesses that have a business relationship with an SBA Express Lender to access quickly up to $25,000, the site says.

The site says the loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loans or used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan.

If a small business has an urgent need for cash while waiting for decision and disbursement on an Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan.

The terms are:

• Up to $25,000

• Fast turnaround

• Will be repaid in full or in part by proceeds from the EIDL loan.

SBA Loan Forgiveness

The site says that as part of its coronavirus debt relief efforts, the SBA will pay six 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.

The relief is not available for Paycheck Protection Program loans or Economic Injury Disaster loans.

Borrowers do not need to apply for this assistance. It will be automatically provided 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

For current SBA Serviced Disaster - Home and Business - Loans: If a disaster loan was in "regular servicing" status on March 1, 2020, the SBA is providing automatic deferments through December 31, 2020.

What does an "automatic deferral" mean to borrowers?

• 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 a loan. Borrowers who have established a PAD through Pay.Gov or an OnLine Bill Pay Service are responsible for canceling these recurring payments. Borrowers who 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 canceled recurring payments will need to reestablish the recurring payment.

People with questions about their current loan and whether or not the loan is automatically deferred can contact their loan servicing office directly using the following information:

• Birmingham Disaster Loan Servicing Center:

- Phone: 800-736-6048

- Email: Birmingham

[email protected]

• El Paso Disaster Loan Servicing Center:

- Phone: 800-487-6019

- Email: [email protected] .

For more information, people can visit the SBA Coronavirus Relief Options site at https://www.sba.gov/funding-programs/loans/coronavirus-relief-options .

 

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