The $900 billion COVID-19 relief package signed into law on December 27, 2022, included $284 billion in new funding for the Paycheck Protection Program (PPP), the forgivable federal loan program established in March 2022 as part of the initial pandemic aid package known as the CARES Act.
While the renewal from the Paycheck Protection Program was the portion of the relief bill that received probably the most attention, another part of this bill included changes towards the SBA’s 7(a) program as a whole (technically, the PPP falls under the 7(a) program) along with the SBA’s 504 Microloan program. These changes include new forgiveness rules, reduced fees, and much more.
Read on for more information on this SBA 7a loan forgiveness initiative.
New SBA Loan Rules For COVID Relief
This latest pandemic relief package helps make the following changes to the SBA’s 7(a) and 504 Microloan programs.
- New and existing 7(a) and 504 Microloans from the SBA will get three months of forgiveness of principal and interest payments, capped at $9,000/month.
- Businesses in industries identified as particularly hard-hit by COVID (foodservice, hotels/accommodation, education, arts & entertainment, laundry services, personal care services) will get an additional five months of forgiveness of principal and interest payments (also capped at $9,000/month) for a grand total of eight months of principal and interest payment forgiveness.
- The SBA is increasing its loan guarantee from 85% to 90% to create its loan products more attractive to lenders.
How To Entitled to the New SBA Loan Rules
In to get three months’ price of forgiveness of principal and charges for the SBA 7(a) loan or 504 microloan, you don’t need to meet any qualifications beyond the qualifications necessary to receive the loans themselves.
In to obtain the full eight months’ price of forgiveness of principal and interest payments of these loans, your business will have to be in one of the industries identified by the SBA as particularly impacted by the coronavirus pandemic, such as food service, accommodation, education, arts & entertainment, and personal care services.
Where To Apply For An SBA 7(a) Loan Or Microloan
SBA 7(a) loans and 504 Microloans aren't provided by the SBA itself, but rather through private lenders that participate in these SBA programs. Thankfully, the SBA itself creates a yearly listing of lenders which have distributed the most SBA-backed funds to qualifying businesses. Our article detailing the top 10 SBA lenders is drawn from their list, and I’d encourage you to definitely look at this article before deciding which lending institution to seek an SBA loan from.
More About Funding For COVID Relief
Sadly, our global COVID nightmare has now entered its second twelve months.
For those small business owners continuing to persevere when confronted with these unprecedented headwinds, our COVID-19 resource hub is an invaluable collection of pandemic-related information. And when you’re interested in receiving a PPP loan for COVID relief, take a look at our piece explaining the rules as well as from the latest round of PPP loans along with our article detailing our favorite 7 lenders offering PPP loans guaranteed through the SBA.
