ARLINGTON—NAFCU is offering an overview of the latest guidance issued by the Small Business Administration (SBA), along with congressional efforts to refine legislation, which will provide relief for small businesses across the country.
“Early this month, the SBA announced that small businesses could apply for disaster loans to help offset impacts from the coronavirus pandemic,” said NAFCU Regulatory Affairs Counsel Kaley Schafer. “In order to obtain a disaster loan, a state or territory must first request assistance from the SBA and then, the agency will issue a disaster declaration.”
In an attempt to offer greater flexibility and a faster process when seeking disaster loan assistance, Schafer noted how the SBA adjusted its criteria: “While a state or territory must certify that at least five small businesses within the state or territory have suffered a substantial economic injury, the requirement that at least one business be located in each county or parish does not currently apply.”
Another Option
Schafer further explained how loan deferments can be another way lenders can offer assistance to small businesses during this time.
“Lenders may grant a deferment of up to six consecutive months for loans sold on the secondary market,” noted Schafer. “Lenders may grant a one-time deferment of up to 90 days without requiring prior investor consent for loans not sold on the secondary market.”
The SBA issued an information notice, expiring March 2021, reminding 7(a) lenders of their unilateral authority to provide temporary relief to borrowers with deferred payments in certain circumstances. The agency earlier this week also announced automatic deferment of existing disaster loans through the end of 2020, said Schafer, who noted this will alleviate the need for borrowers to request deferment from the SBA.