Banks & Credit Unions: SBA Debt Relief Program

This page will be updated continuously to reflect the most recent information. This page was last updated on April 7, 2020.

 

Overview

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides debt relief for small businesses that already have an SBA loan (such as a 7(a), 504, or microloan) or take one out within 6 months after the CARES Act is enacted.  The SBA will pay all loan costs for borrowers, including principal, interest, and fees, for six-months.  Under the new law, the SBA is directed to make payments within 30 days of the date on which the first payment is due.

 

Eligibility

A borrower is eligible if:

  • The business has an SBA 7(a), 504, or microloan loan (Paycheck Protection loans and SBA disaster loans are not eligible—but payments are already deferred under those loans);
  • The business applies for and receive an SBA 7(a), 504, or microloan within six months of enactment of the CARES Act (March 27, 2020).

More about SBA loans

  • An SBA 7(a) loan is a loan of up to $5 million for borrowers who lack credit elsewhere and need access to versatile financing, providing short-term or long-term working capital and to purchase an existing business, refinance current business debt, or purchase furniture, fixtures, and supplies.
  • A 504 loan is a loan up to $5.5 million for small businesses that provides long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization.  Borrowers must apply through a Certified Development Company, which is a nonprofit corporation that promotes economic development.
  • A microloan loan is a loan up to $50,000 to help small businesses and certain not-for-profit childcare centers to start up and expand.  The average microloan is about $13,000.  These loans are delivered through mission-based lenders that also provide business counseling.

 

Implementation

The borrower does not need to apply for or request debt relief—the law intended for the relief to occur automatically.  Under the new law, the SBA is directed to make payments to the lender within 30 days of the date on which the first payment is due.  For questions, please reach out to the SBA Hawaii District Office.