SBA Payment Forgiveness (under the CARES Act)

In addition to specific disaster relief programs to assist small businesses, the CARES Act provides subsidy for certain loan payments under the SBA 7a and SBA 504 programs.

The SBA 504 loan payments are already being made under the CARES Act for existing 504 borrowers in regular servicing status starting with the April 1, 2020 payment. SBA 504 current borrowers will receive six months of payment forgiveness from April 1st to September 1st on their SBA 504 loan.

These payments do not need to be repaid. Normal payments will resume on October 1, 2020. This Payment Forgiveness does not affect the private lender companion loan. Also note: New SBA 504 loans approved prior to March 27, 2020, and funding before September 27, 2020, will receive an immediate six months of Payment Forgiveness on their 504 loan starting when their first payment is due.

For SBA 7a loans, lenders must submit information to the Fiscal Transfer Agent (FTA) for each 7a loan in order to begin receiving the subsidized payments. Under this provision, SBA will cover all loan payments for existing SBA 7a borrowers, including principal, interest, and fees, for six months. Again, these payments do not need to be repaid.

Lenders have the option of providing loan level data or uploading portfolio information through a template spreadsheet on their 1502 Dashboard found on the FTA’s website:

Detailed information on implementation for lenders is available in SBA Procedural Notice 5000-20020 and additional guidance is provided in SBA Procedural Notice 5000-20023.