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  • Writer's pictureWandro, Kanne, & Lalor, PC

Does Your Small Business Have an Existing SBA Loan? The SBA Will Make Your Payments for Six Months.

Updated: Apr 3, 2020

As we've previously discussed in an earlier post, the CARES Act created the Paycheck Protection Program, which allocates $349 billion for new SBA loans to cover qualified expenses. But what if you already have an SBA loan?

In addition to creating options for new borrowers, the CARES Act also appropriated $17 billion to subsidize some small business loans. If your business has loans in regular service under the following pieces of legislation, the SBA will pay the principal, interest, and fees owed for six months:

- Section 7(a) of the Small Business Act

- Title V of the Small Business Investment Act

- 7(m) of the Small Business Act made by an intermediary before enactment of the Act

Payments begin with the first payment due after March 27, 2020.

The SBA has previously issued a notice to SBA 7(a) lenders and 504 Certified Development Companies (CDCs) reminding them of their authority to provide borrowers with temporary relief through deferred payments under certain circumstances. Because of this notice, many lenders and borrowers made deferral agreements before the CARES Act was enacted. Even if your loan is on deferment, the subsidies apply. And if a loan is on deferment, SBA payments commence with the next payment due after the deferment period.

This program allows a borrower to receive debt service relief for a year, and lenders would receive six months paid by the SBA. Ideally, the program allow enough time to save some struggling small businesses and keep loans out of liquidation.


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This Wandro & Associates Update is intended to inform firm clients and friends about legal developments, including recent decisions of various courts and administrative bodies. Nothing in this Practice Update should be construed as legal advice or a legal opinion, and readers should not act upon the information contained in this Update without seeking the advice of legal counsel.

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