Debt Relief beyond the PPP – Loans Eligible for the SBA to make Six Months of Payments

For anyone considering a business acquisition, now may be a great time to do it. Many buyers finance business acquisitions using 7(a) loans. A 7(a) loan is a general-purpose loan up to $5 million, which can be used to purchase a business, purchase equipment, or obtain working capital, among other uses. 504 loans are loans for the limited purpose of financing real estate or equipment purchases. Finally, SBA Microloans are loans up to $50,000 which can be used for the purchase of furniture, materials, equipment, and/or for working capital. With six months of loan payments being paid by the SBA, there is a high incentive to pursue one of these loans prior to September 27th,2020. The financing packages available under a 7(a) loan often include plenty of working capital.

Which loans are eligible for the Debt Relief Program?

7(a) loans, 504 loans, and microloans (“Covered Loans”) are eligible. Please note that Debt Relief under this program will not apply to a PPP loan. Disaster loans are not eligible either. Covered Loans made before March 27, 2020

Benefit: SBA will pay the principal, interest, and any associated fees for 6 months
Timing of Benefit: For the 6-month period beginning with the next payment due on the covered loan

Covered Loans made between March 27, 2020, and September 27, 2020

Benefit: SBA will pay the principal, interest, and any associated fees for 6 months
Timing of Benefit: For the 6-month period beginning with the first payment due on the covered loan

7(a) Loan

What is it?
A loan product of up to $5 million for borrowers who lack credit elsewhere and need access to versatile financing:
– short-term or long-term working capital
– finance purchase of an existing business
– refinance current business debt, or
– purchase furniture, fixtures, and supplies

How to Apply

There are many different types of 7(a) loans, you can visit this site to find the one that’s best for you. You apply for a 7(a) loan with a bank or a mission-based lender.

504 Loan

What is it?

A loan of up to $5.5 million to approved small businesses with long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization. It is a good option if you need to purchase real estate, buildings, and/or machinery.

How to Apply

You apply through a Certified Development Company, which is a nonprofit corporation that promotes economic development. SBA has a free referral service tool called Lender Match to help find a lender near you.

Microloan

What is it?

A loan of up to $50,000 for the purchase of furniture, supplies, materials, equipment, and/or for working capital. Microloans may not be used for real estate. The average microloan is about $13,000.

How to Apply

These loans are delivered through mission-based lenders who are also able to provide business counseling.

Madeline Person, Attorney (NC)
Post: April 15,2020