Additional SBA Payment Forgiveness

Authorized through the Economic Aid Act
An additional stimulus package, the Economic Aid Act, was passed December 27, 2020. Congress appropriated $3.5 billion to carry out additional payment subsidies on SBA loans. Each SBA loan is eligible to receive payment subsidy based on SBA loan approval date and type of industry.

Here are the new general rules that apply to Payment Forgiveness authorized for both SBA 504 and 7a loans:

  • Approved by SBA prior to September 27, 2020 and funded prior to September 27, 2020

Eligible to receive Second Round Section 1112 Payment Forgiveness for a 3-month period beginning February 1, 2021. The Forgiveness payment is limited to $9,000 per month / per loan. The borrower will be responsible for the excess amount. The excess amount will need to be paid by wire or check between the 1st and 15th of each month.

  • Approved by SBA prior to September 27, 2020 and funded after September 27, 2020

“Newly Eligible First Round Loans” are eligible to receive Section 1112 Payment Forgiveness for a 6-month period beginning the next payment due. *May be eligible for a Second Round Section 1112 Payment Forgiveness for a 3-month period if SBA determines there are sufficient funds.

  • Approved by SBA prior to March 27, 2020 and Meets Hard-Hit Industries (By NAICS Codes)

NAICS codes affected: 213, 315, 448, 451, 481,485, 487, 511, 512, 515, 532, 61, 71, 72 or 812

Eligible to receive an additional 5-month of Payment Forgiveness immediately following the end of the Second Round Section 1112 3-month period. The Forgiveness payment is limited to $9,000 per month / per loan. The borrower will be responsible for the excess amount. The excess amount will need to be paid by wire or check between the 1st and 15th of each month.

  • Approved by SBA between September 28, 2020 and January 31, 2021

These borrowers are not eligible to receive Section 1112 Payment Forgiveness. Lenders are prohibited from cancelling a loan and resubmitting after February 1, 2021, and are prohibited from refinancing the loan after February 1, 2021.

  • Approved by SBA between February 1, 2021 and September 30, 2021

Eligible to receive Section 1112 Payment Forgiveness for a 6-month period beginning with the first payment due.

 

Payment Forgiveness means the borrower’s SBA payment will be made for them. They do not have to repay it. (It is not the same as being deferred.) SBA 7a Lenders will need to submit their borrower’s payment information to SBA to be eligible. For more information regarding 7a requirements, please refer to SBA Procedural Notice 5000-20079. Click here for a flowchart outlining this information.

**All Section 1112 debt relief is subject to funds availability provided by Congress.