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ARTICLE · 30 MARCH 2020

Servicing SBA Loans During The COVID-19 Crisis

Ward and Smith, P.A
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With COVID-19 shutting down whole swaths of the economy, the SBA has issued a notice to SBA 7(a) Lenders and 504 Certified Development Companies (CDCs)

United StatesCoronavirus (COVID-19)
Lance Martin
Lance Martin

With COVID-19 shutting down whole swaths of the economy, the SBA has issued a notice to SBA 7(a) Lenders and 504 Certified Development Companies (CDCs), reminding them of their unilateral authority to provide borrowers with temporary relief through deferred payments under certain circumstances. 

The message is that lenders can and should work with otherwise viable businesses suffering cash flow problems right now.

For 7(a) business loans, if the loan is not sold on the secondary market, Lenders may grant a deferment for up to six months.  For a loan sold on the secondary market, Lenders may grant a one-time unilateral deferment of up to 90 days without investor consent.  There is a process to notify the investors after the fact.  Future deferments – at this time – would require investor consent.

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