SBA Debt Relief

SBA Debt Relief

SBA is providing debt relief to existing SBA loan borrowers during the COVID-19 pandemic.

7(a), 504, and Microloans

Initial Debt Relief Assistance

As a part of the CARES Act, SBA is 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.

Disaster Home and Business Loans

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

Lender Guidance

7(a) and 504 Loan Program Guidance

Latest guidance:

Previous guidance:

Microloan Program Guidance

Latest guidance:

Previous guidance:

Other documents

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