The U.S. Small Business Administration (SBA) has taken steps to assist small businesses grappling with the challenges of loan compliance and repayment in the wake of the pandemic. In a move aimed at bolstering the financial health of small enterprises, the SBA has announced expanded flexibility for borrowers of COVID Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP) loans.
Starting from January 1, 2024, the SBA has introduced a 60-day goodwill exception period for COVID EIDL and PPP borrowers with loans under $100,000. This period, which extends through March 3, 2024, is designed to help these businesses come into compliance and avoid the severe consequences of defaulting on a government loan. During this time, the SBA will pause escalating collection activities and focus on extensive outreach to ensure businesses are well-informed about their repayment options and the process for applying for loan forgiveness.
For PPP borrowers, this initiative is particularly significant. Many can avoid default and its repercussions without having to repay the loan if they have met the payroll requirements. The SBA encourages these borrowers to complete the PPP forgiveness application, a process that typically takes less than 15 minutes. The status of loans can be checked via the MySBA loan portal.
For those with COVID EIDL, the SBA is offering expanded hardship accommodation plans. These plans can significantly reduce monthly payments, sometimes to as low as $25 per month for the initial six months, with gradual increases over the subsequent years. Information and applications for these plans are accessible through the MySBA loan portal.
The SBA underscores the long-term benefits of maintaining good standing on these loans. These benefits include improved credit scores, eligibility for future government financial assistance, and in some cases, the avoidance of federal and private collection actions such as tax return withholding and wage garnishment.
In addition to these measures, the SBA offers free or low-cost counseling through its national network of Resource Partners. These partners can assist small businesses in integrating loan repayments into their budgets, provide tax benefit information, and offer other counseling services.
This initiative by the SBA is a testament to its commitment to supporting America’s small businesses, especially in these challenging times. Small business owners are encouraged to utilize these opportunities and resources to stabilize and grow their enterprises. For more detailed information about these programs and other services, borrowers can visit the SBA website at sba.gov.
This article, “SBA Announces Support Measures for PPP and COVID EIDL Borrowers” was first published on Small Business Trends