Small Business Administration (SBA) relief payments
Febuarry 26, 2021
Author Benetrends Financial
The SBA announced a change late on the 16th related to the details of the package. Keep in mind there are significant benefits to the SBA loans that bring huge benefits to a new franchise owner. Below is additional information provided by Eric Schechterman, CDO of Benetrends, that goes into a bit more detail.
Please review the details below as it relates to a major change from the government and the Small Business Administration (SBA) regarding relief payments on SBA loans.
In an procedural update notice dated February 16th, (linked here) the government has determined that the $3.5 billion that was appropriated to carry out Section 325 of the Economic Aid Act is insufficient to make the payments for the periods authorized by Section 1112(c)(1) of the CARES Act, as amended by Section 325 of the Economic Aid Act. SBA has developed a plan to proportionally reduce the number of months provided for each category of loans and this is effective immediately.
Loans Approved Beginning on February 1, 2021 and Ending on September 30, 2021
For a new 7(a) loan, 504 loan, or Microloan approved during the period beginning on February 1, 2021 and ending on September 30, 2021, SBA will make the Section 1112 payments for a 3-month period instead of a 6-month period, subject to the availability of funds.
All candidates will be shared the information as they engage in conversations with Benetrends. There will be no delay or hesitation on our end and I hope/expect people to respond well to the change. The guaranty fee waiver was not mentioned in the notice so we expect that to remain in place. Keep in mind, there is still 3 months of forgiveness on the new loans and the interest rate is lowest since 2009….there are still incentives for buyers. This is was nothing you could have foreseen or controlled and the policy change was just released Tuesday the 16th. EVERYONE in the industry was sharing the same message and will now have to adapt the messaging. And from a candidate perspective….what this change shows is that money can run out and government can change things….so for those that still want to take advantage of what’s being offered, I would suggest not delaying.
** Disclaimer: as you can see from information, things can change without much notice from the government. We will keep you updated on any further releases from the SBA, but as of today, this is the process the lenders will follow