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COVID Relief Bill: What It Means for SBA Loans & Increased Lending

Capitol building in Washington, DC

The phone is ringing off the hook here at Seedcopa, with borrowers asking 2 key questions about the new $900 billion in COVID relief:

1) How will my SBA loan application be affected?

2) Will my existing SBA loan payments be covered, with no need to repay, under the new COVID relief bill?

With more than 5,000 pages, the COVID relief bill requires analysis, with implementation under the purview of the SBA. As you know, Seedcopa releases information once we’re able to confirm it, as we did with the CARES Act of last spring. Here’s what we know now, and stay tuned for more.

  1. Covered Loan Payments

The new stimulus bill now forgives up to eight months of principal and interest payments on SBA 504 loans and 7(a) loans. For borrowers who have already received six months of covered payments, we believe you’ll receive an additional three months. You may be able to enjoy another five months of covered payments (bringing the total up to eight months) if you are in a hard-hit industry such as food service and lodging, arts, entertainment, education, personal care and recreation. Also, as we understand it today, there may be six months of principal and interest payments available for newly approved loans. The stated cap is $9,000 a month per borrower.

  1. Fee Relief

The new legislation allows the SBA to waive certain fees for borrowers, and as a result, Seedcopa is seeing a surge in inquiries from businesses that have been considering new projects and are now ready to pull the trigger. Previously, borrowers paid a little more than 2.5% in 504 fees built into their loans. The SBA plans to cover 2% of those fees for borrowers whose loans are approved from enactment of law and ending 9/30/21.

  1. Guarantees Raised

The new legislation is raising the guarantee for 7(a) loans to further stimulate the economy. 7(a) loans previously  guaranteed at 75% will now be guaranteed at 90% until 10/1/2021.

This Just In: Paycheck Protection Program

The SBA and U.S. Treasury Department just released two new interim final rules regarding PPP.

Another important factor regarding the COVID relief bill for PPP loans: With this new legislation, we believe that PPP loans under $150,000 may utilize a simplified forgiveness application (not yet released) intended to be a one-page certification for most borrowers. We will continue to update you on more details for implementation as we receive them from the SBA. In the meantime, we are participating in the legislation’s interpretation through the National Association of Development Companies (NADCO), where Seedcopa’s Sherwood Robbins serves as Region 3 Director.

Here are a few valuable resources from NADCO:

December 2020 COVID Relief Bill (small business provisions begin on page 2042)

Key Measures Included in COVID Relief Bill

Congressional Section By Section Summary

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For almost forty years, Seedcopa + SeedcoDE has helped businesses get the money they need to start, grow and expand. We are proud that the loan programs we work with promote economic development.

Together with economic development partners throughout Pennsylvania and Delaware, we help to grow local businesses, create and retain jobs and stimulate local communities.

Our team has over 75 years of combined government lending experience and a dedication to excellent customer service. After our initial assessment of your project, our commitment is to get you approved and closed.

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