With the $900 billion stimulus bill expected to become law, major changes will be coming to the SBA 7(a) lending program.
By Matthew Lyon
DECEMBER 22, 2020
Note: This is our understanding as of December 22, 2020. Things can and will change. As of now, both chambers of Congress have approved the bill and it is awaiting approval by the President to become law.
Summary of Changes Coming to SBA
Here are some highlights of the new spending bill:

7(a) Program Changes for Acquisition Loans

The stimulus bill will fundamentally change the 7(a) loan program to start 2021 with the SBA increasing their loan guarantee to lenders from 75% to 90% and waiving guarantee fees to all borrowers until September 30, 2021.

Payments Extended

The SBA will again pay principal and interest payments on behalf of borrowers with 7(a) loans. Borrowers who have already received six months of payments will receive an additional three months, with those in certain industries like restaurants, retail stores, and salons receiving an additional five months for a total of eight months. Loans approved (not closed) between February 1, 2021 and September 30, 2021 will also receive six months of payments. Limitations were added, capping payments by the SBA at $9,000 per payment. Borrowers with monthly payments over $9,000 will have to cover the difference.

Paycheck Protection Program Round 2

The Paycheck Protection Program has received an additional $284 billion and certain businesses are eligible for a second loan. Loan amounts are still 2.5x monthly payroll costs, but this time capped at $2 million. Generally, eligibility for a second loan requires that the business must have experienced a 25% or more drop in revenue in Q1, Q2, or Q3 of 2020 over the same period in 2019. Another change in the Program was clarification that all P.P.P. loans are not taxable and not considered as income.

If you would like to stay up to date with information about the changes coming to SBA for 2021, sign up for our newsletter here. Please refer to Division N – Additional Coronavirus Response and Relief here.
Reference Guide:
Title III – Continuing the Paycheck Protection Program and Other Small Business Support (Page 2042)
Sec. 325 – Extension of the Debt Relief Program (Page 2153)
Sec. 326 – Modifications to 7(a) Loan Programs (Page 2164)
Sec. 327 – Temporary Fee Reductions (Page 2167)
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