September 29, 2020
By Caity Roach
Contributing Editor, Hot Topic Tuesday
Hot Topic Tuesday — U.S. Senate Introduces Bill to Extend the Small Business Debt Relief Program
On September 24, 2020, the U.S. Senate Committee on Small Business and Entrepreneurship introduced legislation to extend the small business debt relief program. If passed, the Small Business Debt Relief Extension Act will provide at least 5 more months of principal, interest, and fee payments on all preexisting, deferred, and new 7(a) loans, 504 loans, and microloans. However, without Congressional action, hundreds of thousands of struggling small businesses will lose the breathing room that the program offered and will be required to return to making loan payments in October.
“The pandemic is much longer than we anticipated in March when Congress created the debt relief and other small business programs. There is still a great need for the support provided by the debt relief program; there is no reason why it should end now,” says Ranking Member Ben Cardin. “I am proud to join Senator Coons and Congressman Delgado to introduce this commonsense bill to continue providing relief for struggling small businesses that have SBA loans, and provide additional support to those that have been hardest-hit by COVID-19, especially underserved small businesses.”
Here are the key features of the Small Business Debt Relief Extension Act:
- Extends debt relief payments for all small businesses with an SBA-backed loan for five months, through February 2021. That includes 7(a) loans, 504 loans, and microloans.
- Provides an additional seven months of debt relief for highly vulnerable businesses, including all those with a Community Advantage or microloan and those with a regular 7(a) or 504 loan that operate in the sectors hardest hit by the pandemic: educational services; arts, entertainment, and recreation; accommodation and food services; and charter buses.
- Extends the availability of debt relief on new SBA loans for a full year, to include those approved through September 2021. This is intended to provide an ongoing incentive for small business growth and job creation in all sectors.
- Ensure debt relief benefit is associated with no tax liability for any participating business.
- Improve program integrity and transparency, by increasing required SBA reporting to Congress and communication with borrowers.
- Require no new spending by Congress, as it will draw upon funds already appropriated under the CARES Act.
The full text of the Bill is available here.