In addition to the expansion of the Small Business Act’s (“SBA”) business loan program and the SBA’s disaster loan program, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) authorizes loan payment subsidies for certain loans.
These loans include those (i) guaranteed by the Small Business Administration (“Administration”) the SBA Business Loan Program (including the Community Advantage Pilot Program, but excluding the new payroll loan program established under Section 1102 of the CARES Act) or Title V of the Small Business Investment Act; or (ii) made by an intermediary to a small business concern using loans or grants received under the SBA’s Microloan Program.
The Sense of the Congress is that the Administration “should encourage lenders to provide payment deferments, when appropriate, and to extend the maturity of covered loans, so as to avoid balloon payments or any requirement for increases in debt payments resulting from deferments provided by lenders during the period of the national emergency” with respect to COVID-19.
The subsidy includes the Administrator paying (on behalf of the borrower) the principal, interest, and any associated fees owed in a regular servicing status for loans made:
Borrowers are encouraged to speak with their lenders regarding this subsidy.
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We will be keeping you informed about the CARES Act of 2020 through this “Inside the CARES Act” series on our Biz Law Blog. For other topics related to COVID-19, visit our Coronavirus Thought Leadership Connection.
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