Celebrate. Much needed payments for your borrowers. And Guidance for you!
Relief is on the way for many 7(a) and 504 SBA borrowers as Round 2 of CARES Act Section 1112 payments kicks off on February 1st. As the news hits the airwaves, it’s highly likely that you’ll be getting calls from your SBA Round 1 borrowers. Expect a deluge.
How much? When? Borrowers that received the first round of payments will probably jump right to the chase: How much will I get? And for how long? It’s a good idea to hold a brief training session with your lending team so they’ll be ready with quick, up front answers. Here are the conditions for Section 1112 Round 2 payments:
- For loans approved before March 27, 2020, borrowers NOT on deferment as of February 1, 2021, will begin receiving payments as of that date.
- For loans approved before March 27, 2020 and ARE on deferment as of February 1, 2021, Round 2 will begin the first month after the deferment period ends. (Note: Your borrower may prefer cancelling the deferment to take advantage of the CARES payments sooner.)
- First Round borrowers are eligible to receive three (3) months of payments. The monthly payment amount for each covered loan is capped at $9,000 per month.
- First Round borrowers will be eligible immediately and will receive five (5) months of additional Section 1112 payments if the borrower’s NAICS codes begin with 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812;
Now for the Guidance. Who’s eligible?
- For SBA loans approved March 27, 2020-September 27, 2020, borrowers may be eligible for payments as long as SBA has funds available.
- Loans approved September 28, 2020-January 31, 2021 are NOT eligible for Round 2 CARES Act payments
- Loans approved February 1, 2021-September 30, 2021, are eligible for the 6-month period beginning with the first payment due after being moved into regular servicing status.
As always, we’re here to help guide you through this latest CARES Act installment – and all facets of SBA lending. Contact JRB.
Until next time …
Source: SBA Procedural Notice 5000-20079