The CARES Act included provisions for the Small Business Administration (SBA) to provide crucial financial relief to small business owners through debt relief assistance. Specifically, the Sba Cares Program was designed to ease the burden of loan payments for eligible borrowers with 7(a), 504, and Microloans. This initiative aimed to help businesses navigate the economic challenges during the pandemic by covering principal, interest, and fees for a defined period.
Initially, the debt relief applied to loans fully disbursed before September 27, 2020, and excluded Economic Injury Disaster Loans (EIDL). However, the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act of December 27, 2020, broadened the eligibility. Under these amendments, the SBA CARES Program extended to cover 7(a), 504, and Microloans approved up to September 27, 2020, regardless of disbursement status. The core structure of the initial debt relief remained consistent.
Borrowers did not need to apply to receive this assistance. The SBA CARES Program was structured for automatic implementation. For loans in regular servicing status and not on deferment, the SBA initiated monthly payments based on the upcoming due installments. This support covered up to six months of payments. For loans already under deferment, the SBA payments were scheduled to commence after the deferment period concluded, again for a total of up to six months of installment payments.
The SBA communicated directly with lenders of 7(a), 504, and Microloans to facilitate the SBA CARES Program. Lenders were tasked with reporting the due amounts to the SBA once loans were fully disbursed. Any payments collected from borrowers after March 27, 2020, during this relief period could be either credited to the outstanding loan balance or returned to the borrower, depending on the borrower’s preference.
Building upon the initial six-month relief period of the SBA CARES Program, the Economic Aid Act introduced additional debt relief measures for 7(a), 504, and Microloan borrowers. This extended assistance, which varied based on loan approval dates, began on or after February 1, 2021. For detailed information regarding the availability of this further assistance for specific SBA loans, borrowers were advised to contact their respective lenders directly. It is important to remember that all aspects of the SBA CARES Program are subject to the availability of funding provided by Congress.
