SBA Loan Payment Subsidies: Good News for Business Buyers
For business purchasers, there’s good news from the SBA. They’re offering loan payment subsidies for certain loans.
For new SBA 7(a), 504, or microloans approved by SBA beginning February 1, 2021 and ending on September 30, 2021, the SBA will make the monthly payments for a 3-month period. This was originally 6-month period, and this is subject to the availability of funds, according to GABB member Susan Kite, who is also Senior Vice President of SBA Business Development at Georgia Primary Bank.
Loans must be fully disbursed and in regular servicing before the payments can begin. New loans approved by SBA beginning February 1, 2021 and Ending on September 30, 2021 will also have the SBA Guaranty Fee Waived, according to Kite.
“This is a savings of $13,500 on a $500,000 loan, or $31,500 on a Million-Dollar loan, $65,000 on a $2 Million loan, and capped at $4,166,666 loan with 90% guaranty which saves $138,125,” Kite said.
These programs will remain as long as funding lasts, she says.
“Thus, your buyers should treat them as a “bonus” and not rely on them fully when determining cash needs,” Kite advises business brokers.
7(a), 504, and Microloans
Initial Debt Relief Assistance
As a part of the CARES Act, SBA was initially authorized to pay 6 months of principal, interest, and any associated fees that borrowers owe for all 7(a), 504, and Microloans reported in regular servicing status (excluding PPP loans). This debt relief to borrowers was originally dependent on the loan being fully disbursed prior to September 27, 2020 and does not apply to loans made under the Economic Injury Disaster Loan (EIDL) program.
These original provisions were amended on December 27, 2020 through the Economic Aid to Hard-Hit Small Businesses, Non-Profits and Venues Act (Economic Aid Act). The Economic Aid Act revised the eligibility criteria for assistance to include all 7(a), 504, and Microloans approved up to September 27, 2020 even if not fully disbursed. All other provisions for initial debt relief remained the same.
Borrowers need not apply for this assistance. SBA provides this assistance automatically as provided below:
- For loans not on deferment, SBA will make monthly payments based on the next payment due on eligible loans for a total amount equivalent to no more than 6 months of installment payments.
- For loans currently on deferment, SBA will begin making monthly payments with the first payment due after the deferment period ends for a total amount equivalent to no more than 6 months of installment payments.
SBA has notified 7(a), 504, and Microloan Lenders that it will pay these borrower loan payments. Lenders are to report to SBA periodically on the amounts due once a loan is fully disbursed. Payments collected after March 27, 2020 may be applied to the outstanding loan balance or returned to the borrower at the borrower’s discretion.
Additional Debt Relief Assistance
The Economic Aid Act also authorized additional debt relief payments to 7(a), 504, and Microloan borrowers beyond the 6-month period prescribed in the CARES Act. The level of assistance varies based on when the loan was approved and will begin on or after February 1, 2021. Please contact your Lender for questions on the availability of this assistance for your SBA loan.
THE INITIATIVES DESCRIBED ABOVE ARE LIMITED TO THE LEVEL OF AVAILABLE FUNDING PROVIDED BY CONGRESS.
For current SBA Serviced Disaster (Home and Business) Loans: If your disaster loan was in “regular servicing” status on March 1, 2020, the SBA is providing automatic deferments through March 31, 2021.
What does an “automatic deferral” mean to borrowers?
- Interest will continue to accrue on the loan.
- 1201 monthly payment notices will continue to be mailed out which will reflect the loan is deferred and no payment is due.
- The deferment will NOT cancel any established Preauthorized Debit (PAD) or recurring payments on your loan. Borrowers that have established a PAD through Pay.Gov or an OnLine Bill Pay Service are responsible for canceling these recurring payments. Borrowers that had SBA establish a PAD through Pay.gov will have to contact their SBA servicing office to cancel the PAD.
- Borrowers preferring to continue making regular payments during the deferment period may continue remitting payments during the deferment period. SBA will apply those payments normally as if there was no deferment.
- After this automatic deferment period, borrowers will be required to resume making regular principal and interest payments. Borrowers that cancelled recurring payments will need to reestablish the recurring payment.
If you have questions about your current loan and whether or not your loan is automatically deferred, please contact your Loan Servicing Office directly using the following information:
- Birmingham Disaster Loan Servicing Center:
- Phone: 800-736-6048
- Email: BirminghamDLSC@sba.gov
- El Paso Disaster Loan Servicing Center:
- Phone: 800-487-6019
- Email: ElPasoDLSC@sba.gov
Read More
Buying and Selling Businesses in a Pandemic: GABB Feb. 23
Despite the challenges posed by the pandemic in 2020, many Georgia business brokers continued to sell more than a million dollars worth of businesses. GABB board member Tanya Nebo and six members of the GABB Million Dollar Club offered a wide variety of advice on Tuesday, Feb. 23, during a panel discussion of how to buy and sell businesses during a pandemic.
To view their comments on how they prospered in 2020, watch this video posted on GABB’s new YouTube channel.
Among the 2020 members of the GABB’s Million Dollar Club who will be on hand on Feb. 23 are Jefffery Merry, senior business analyst at the BUSINESS HOUSE, inc.; J. Snypp, Vice President of Preferred Business Brokers, Inc.; Matt Wochele, founder of Preferred Business Brokers, Inc.; Rob Margeton, an M&A Intermediary with Ryco Advisors, LLC; Brian Judson, a business broker with Best Business Brokers; and Jon Roman, business intermediary, franchise consultant and developer at Transworld Business Advisors.
Ms. Nebo is both a business broker and an attorney. Her law practice, real estate agent and business brokerage services focus on commercial real estate, franchising and general business matters (including joint ventures and equity participation models). She is a graduate of Columbia University in New York and the University of Virginia School of Law.
The GABB is the state’s premier association of professionals who help in the purchase and sale of businesses. GABB is committed to promoting professionalism, education and high ethical standards in the profession of business brokering.
For more information, contact GABB President Judy Mims at 404-842-1997 or judy@childcare.properties, or Ms. Loupe at diane.loupe@gabb.org or 770-744-3639.
Read MoreSBA Reaches $200 Billion in EIDL Loans to Small Businesses, Non-Profits
SBA Reaches $200 Billion Milestone in Economic Injury Disaster Loan Program to Small Businesses and Non-Profits
WASHINGTON –Today, the U.S. Small Business Administration reached a milestone in the success of the COVID-19 Economic Injury Disaster Loan (EIDL) program, which has provided U.S. small businesses, non-profits, and agricultural businesses a total of $200 billion in emergency funding.
“Following the enactment of COVID-19 emergency legislation, the SBA has now provided more than 3.7 million small businesses employing more than 20 million people with $200 billion through the unprecedented COVID-19 EIDL loan program,” Acting Administrator Tami Perriello said. “SBA remains committed to helping small businesses recover from the unprecedented economic effects of COVID-19.”
SBA is still accepting COVID-19 EIDL loan applications as the deadline to apply has been extended to Dec. 31, 2021. EIDL funding is used to pay fixed debts, payroll and expenses, accounts payable and other bills that can’t be paid because of the disaster’s impact. This financial resource has allowed millions of small business owners across America to retain employees, continue operating and support their communities during the COVID-19 pandemic.
The Georgia Association of Business Brokers has a number of bankers who have expertise in handling SBA loans. Locate one of GABB’s loan experts at our professional directory.
SBA’s Economic Injury Disaster Loans are just one piece of the expanded focus of the federal government’s coordinated response. The SBA is strongly committed to providing the most effective and customer-focused programs possible.
As a reminder, the loan portion of the COVID-19 EIDL program continues to have funds available at very affordable and flexible terms, with an automatic deferment of one year before monthly payments begin. Every eligible small business and non-profit is encouraged to visit sba.gov/coronavirusrelief to get more information about applying for EIDL and other economic recovery programs.
The Georgia Association of Business Brokers has a number of bankers who have expertise in handling SBA loans.
###
About the U.S. Small Business Administration
The U.S. Small Business Administration helps power the American dream of business ownership. As the only go-to resource and voice for small businesses backed by the strength of the federal government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.
Read MoreSBA Approves Nearly $350 Million in PPP Loans in Georgia in January
ATLANTA – The U.S. Small Business Administration (SBA) approved nearly $530 Million in Paycheck Protection Program (PPP) loans in Georgia in the round of funding that re-opened in January.
The SBA re-opened the PPP Jan. 11 with $284 billion appropriated through the Economic Aid Act. So far in this round of funding, 7,706 PPP loans valued at nearly $530 million have been approved by the SBA in Georgia. As part of ongoing transparency of economic aid programs, the SBA recently released data summarizing loan approvals made through Jan. 24, 2021.
In the SBA Southeast Region – which serves Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee – more than 53,000 PPP loans valued at more than $1.7 billion have been approved.
Nationally, more than 400,000 loans valued at more than $35 billion have been approved this round. Overall, the average loan size is $87,000. Accumulatively, all PPP loans approved in 2020 combined with this round include more than 5.5 million PPP loans totaling $557.8 billion.
“This current round of PPP was designed to ensure increased access to funds for minority, underserved, veteran, and women-owned small businesses,” said Terri Denison, SBA Georgia District Director. “To address potential access to capital barriers, PPP access was initially granted exclusively to community financial institutions (CFIs) that typically serve these concerns. The SBA remains committed to assisting entrepreneurs in areas that may not have had an opportunity to utilize the program during round one of PPP as well as business owners that are prepared to apply for a second draw PPP loan to continue their recovery.”
The full Jan. 24, 2021 PPP Report includes national information on lender types, loan sizes, industries, and borrower demographics.
The data released in the report is a snapshot of the PPP loan portfolio as of Jan. 24, 2021. Any loan changes or cancellations made after this date will be not reflected in the report.
Approximately 4,500 lenders nationwide are participating in the PPP this round. PPP loans are made by lending institutions and then guaranteed by the SBA.
To best serve underserved communities – including minority-, women- and veteran-owned small businesses – the SBA has provided dedicated access to community financial institutions (CFIs) that specialize in serving these communities. At least $15 billion is set aside for PPP lending by CFIs which include Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs) and Microloan Intermediaries. The CFIs may be located (as well as all PPP lenders) by utilizing Lender Match.
While the PPP loan application expressly requests demographic information of borrowers so that the agency can better understand which small businesses are benefiting from PPP loans, the data reflects the information submitted by lenders to the SBA.
The SBA Georgia District continues to work in close partnership with the local SBA Resource Partner Network and expand on multilingual access and outreach about the PPP.
The deadline to apply for a PPP loan is March 31, 2021 or until appropriated funding runs out.
Updated PPP information – including forms, guidance, resources, lender information and data– is at www.sba.gov/ppp.
Information about all SBA coronavirus relief funding is available at www.sba.gov/coronavirusrelief.
Read MoreSBA Improves First Draw Paycheck Protection Program Loan Review
WASHINGTON – The U.S. Small Business Administration is taking steps to improve the First Draw Paycheck Protection Program loan review so that small businesses have as much time as possible to access much needed PPP funds. The Biden-Harris Administration is focused on ensuring small businesses receive the support they need to keep their doors open and continue to employ millions of Americans across the country. The Administration is working with the Agency to identify immediate solutions to address eligibility, compliance, integrity, and promote transparency.
While reviewing the initial draw of PPP loans, anomalies – mostly data mismatches and eligibility concerns – were identified in approximately 4.7% of the lender-submitted data. These concerns will require follow-up between the lender and the borrower so that borrowers can access a second round of loans.
The SBA is committed to working with lenders and eligible borrowers to provide the necessary information for follow-up and help get small businesses back on track so that they’re able to receive another round of PPP loans swiftly. The SBA encourages borrowers and lenders to work together as quickly as possible to resolve the issues. The SBA will automatically move favorable decisions to approval. During the newest round of PPP, the SBA has already approved over 400,000 loans for approximately $35 billion.
“Prior to this newest PPP round, the SBA supported 5.2 million PPP loan borrowers, providing more than $525 billion in economic relief to small businesses and other eligible entities,” said SBA Acting Administrator Tami Perriello. “The Agency is committed to making sure compliance checks are executed on the front-end. The SBA is also committed to addressing issues more efficiently moving forward, to ensure fair and equitable access to small businesses in every community.”
The SBA is immediately addressing the PPP loan review to allow for Second Draw PPP loan applications to be processed in an efficient manner by:
- Hosting a national call to brief lenders on the Platform’s additional detailed information that will assist in the resolution of First Draw PPP loan review and potential holds that impact Second Draw PPP loan application approvals.
- Equipping the Agency’s field team of lender relations specialists with information so they can provide support to lenders and borrowers in understanding the issues and facilitating the appropriate responses to resolve
- Providing additional guidance to PPP lenders on the review and resolution process.
Many Affiliate members of the Georgia Association of Business Brokers are working with the SBA and the PPP program. Find a GABB SBA loan expert here.
Through SBA’s 68 district offices, the Agency will work in close partnership with the Administration to further leverage its resource partner network and expand on multilingual access and outreach about the PPP. Updated PPP information, including forms, guidance, and resources is at www.sba.gov/ppp and at the U.S. Treasury Department’s www.treasury.gov/cares.
How to Resolve First Draw PPP Loan “Unresolved Borrowers” and Hold Codes: PPP Procedures Webinar Slide Deck
Read More