Overview: SBA Debt Relief. “As part of our coronavirus debt relief efforts, the SBA will pay 6 months of principal, interest, and any associated fees that borrowers owe for all current 7(a), 504, and Microloans in regular servicing status as well as new 7(a), 504, and Microloans disbursed prior to September 27, 2020. This relief is not available for Paycheck Protection Program loans or Economic Injury Disaster loans. Borrowers do not need to apply for this assistance. It will be automatically provided …”
Getting Prepared: It’s not such long time from March to September. Next month, SBA’s six months of loan relief payments under the CARES Act Section 1112 start winding down for loans for which SBA began making six monthly payments in April 2020.* Now, you need to take some actions to make sure all runs smoothly as the clock winds down for your borrowers. You have your work cut out for you. My recommendations:
- Important: Notify your borrowers of when SBA’s payments will cease and when they will need to start making payments again.
- Review SBA’s payments to make sure they weren’t applied to late fees and/or to waive late fees resulting from delays in receiving SBA’s payments.
- For loans where your department established autopay, reach out to your borrowers before re-establishing their autopay accounts to make sure they haven’t changed bank accounts.
- For borrowers who initiated autopay from their deposit accounts, remind them to re-establish autopay.
- Maintain a list of loans that were on deferral or whose first payments were made after April, so those loans can be converted after the six SBA payments are made.
Taking these actions will help ease the transition for your lending department and your borrowers. For all of us, working with this program is one more learning curve resulting from the CARES ACT. Please reach out to us if you have questions or need assistance.
Stay safe and take care
*Note: The six months of payments starting to expire in September is according to the information we have at this time.