The SBA will be paying all principal, interest and fees on all existing SBA loan products including 7(a), Community Advantage, 504, and Microloan programs for the next six months.
To say that these are unprecedented times is an understatement.
Each day new information on government assistance keeps pouring in at a rate that is hard to keep up with, offering new meaning to the term drinking from a fire hose.
Just today, we learned that the SBA will be paying all principal, interest and fees on all existing SBA loan products including 7(a), Community Advantage, 504, and Microloan programs for the next six months.
Honestly, that announcement has us in a state of stunned disbelief, but we have corroborated the truth of it before this post went live.
There are many other components to the CARES Act, which offer some amazing assistance for business owners, but we want to focus here on the 7A and 504 mortgage relief program, as it impacts every business owner who has an SBA loan, whether it be for real or personal property. Tens of thousands of business owners have purchased industrial buildings for their own occupancy using the SBA 7A and 504 programs.
For those borrowers this is the best news you could hope for given all the other challenges you are all facing right now. As we understand it, the monthly payment on the SBA portion of your current debt will be automatically paid by the SBA for a period of six months.
That includes principal, interest and any fees associated with your monthly payment. On top of that, the full amount of your relief will be forgiven. That is not a typo. You will not be asked to pay it back. Period. We have been told that some borrowers may have already received the first month of relief on April 1st. So, if you made a payment unaware of the benefit, contact your loan servicer for a refund immediately.
For you 504 borrowers out there who have a conventional first trust deed loan ahead of your SBA second trust deed, the SBA will be requesting that those lenders defer your payments for a period of 3 to 6 months and add that the deferred amount to the balance of your loan, extending the term but not changing your monthly payment. This we have yet to confirm with confidence, but we believe it is in the works, and will re-post in this topic as we learn more. In the meantime, call your lender today.
If anyone would have suggested to us even a month ago that any of the foregoing was possible, we would have considered it a fantasy. But, here we are, stuck in a tough economic pinch and the SBA has pulled out all the stops to help small business. The consequences down the road could be substantial, but we encourage all owner/users to take full advantage of all SBA assistance programs, including the Payroll Protection Program, which offers loans up to 250% of your monthly payroll, completely forgivable if the proceeds are spent on payroll expenses, rent or utilities (including transportation costs).
The SBA has also made it clear that taking full advantage of one assistance loan program does not preclude you from qualifying any of the others. Frankly, we are still having trouble believing all this, but we felt compelled to inform you as soon as possible. Click here for information provided directly by the SBA. More to follow.
While our source for this post is the SBA itself, please study the materials closely for yourself and consult your financial advisors as necessary. Good luck to everyone through these amazing times. Stay safe. Stay healthy and call us any time. We are here to help.