The Small Business Association (SBA) has extended the deferment periods for all disaster loans until 2022...
The Small Business Association (SBA) has extended the deferment periods for all disaster loans until 2022. That means businesses that received loans under the COVID-19 Economic Injury Disaster Loan program won’t have to start making payments on the loan until 2022.
“Small Businesses, private nonprofits and agricultural enterprises, including those self-employed individuals, contractors and gig workers, continue to navigate a very difficult economic environment due to the continued impacts of the Coronavirus COVID-19 pandemic, as well as historic Severe Winter Storms in 2020,” SBA Administrator Tami Perrillo said in a press statement.
As discussed in greater detail in a prior article, small businesses may apply for a maximum business loan of $150,000, which must be used exclusively to address economic injury. Funds can be used to pay for normal operating expenses and working capital needs, such as rent, utilities, payroll, accounts payable, and fixed-payment debts. Loan terms may last up to 30 years. Terms are determined on a case-by-case basis and are dependent upon each borrower’s ability to repay. The interest rate is 3.75% for small businesses and 2.75% for non-profits.
Collateral is not required for loans less than $25,000, and the SBA is not requiring personal guarantees for loans of less than $200,000. To be eligible for COVID-19 EIDL, applicants must be physically located in the United States (or a designated territory) and have suffered working capital losses due to the COVID-19 pandemic. Eligible applicants include:
Businesses with 500 or fewer employees or satisfy the Small Business Act’s definition of “small business”
Cooperatives with 500 or fewer employees
Agricultural enterprises with 500 or fewer employees
Most private nonprofits
Faith-based organizations
Sole proprietorships and independent contractors
If approved, payments are deferred for one year; although interest still accrues. Borrowers may make payments if they choose to do so and will not incur a penalty.
Deferment for Existing COVID-19 EIDL Borrowers
Existing borrowers will now enjoy an extended deferment. On March 15, 2021, the SBA announced extended deferment periods for all disaster loans, including the COVID-19 EIDL program, until 2022.
All SBA disaster loans made in calendar year 2020, including COVID-19 EIDL, will have a first payment due date extended from 12-months to 24-months from the date of the note.
All SBA disaster loans made in calendar year 2021, including COVID-19 EIDL, will have a first payment due date extended from 12-months to 18-months from the date of the note.
Existing SBA disaster loans approved prior to 2020 in regular servicing status as of March 1, 2020, received an automatic deferment of principal and interest payments through December 31, 2020. This initial deferment period was subsequently extended through March 31, 2021. An additional 12-month deferment of principal and interest payments will be automatically granted to these borrowers. Borrowers will resume their regular payment schedule with the payment immediately preceding March 31, 2022, unless the borrower voluntarily continues to make payments while on deferment. It is important to note that the interest will continue to accrue on the outstanding balance of the loan throughout the duration of the deferment.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, Junjuan Song, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
Reputational Risk and Legal Exposure: Why New Jersey Businesses Must Manage Them Together
New Jersey businesses must manage legal and reputational risk together because modern disputes play out on two fronts at once: the legal proceeding itself and the court of public opinion, where customers, employees, investors, and business partners often reach conclusions long before a judge or jury has had the opportunity to evaluate the facts. Success […]
Eviction Is Not Always the End: Understanding Post-Possession Rent Claims in New Jersey and New York
No. An eviction does not automatically end a tenant’s obligation to pay rent. Post-eviction rent claims are common because recovering possession resolves who has the right to occupy the premises, but it does not extinguish the tenant’s contractual obligations under the lease. Whether unpaid or future rent remains owed depends on three factors: the lease’s […]
Company Dissolved? Legal and Financial Consequences to Expect
A company is dissolved; legally, it ceases to exist. Accordingly, dissolution results in significant legal and financial consequences. It is a process that must be properly managed to avoid continuing liability. The Corporate Dissolution Process Corporate dissolution is the legal process of formally closing a corporation, paying its debts and distributing the remaining assets. Most […]
The Legal Implications of Signing a Triple Net Lease
A triple net lease is a commercial lease in which the tenant pays the property’s real estate taxes, insurance, and maintenance costs, known as the three nets, in addition to base rent. They are most often used in freestanding retail and office buildings and in large single-tenant industrial properties, with terms that typically run 10 […]
When to Settle and When to Fight: A Litigator's Framework
Every lawsuit comes with a cost, and knowing when to settle a lawsuit is one of the most consequential decisions a business owner will face. Experienced litigators understand how to minimize cost and obtain certainty for their clients. For many business owners, the decision is viewed almost entirely through a financial lens: What will it cost […]
A corporate attorney advises businesses on formation, ownership, governance, contracts, transactions, compliance, disputes, and the legal risks that arise as a company grows. The role is not limited to filing documents or reviewing agreements. A corporate attorney helps a business understand when a commercial decision has legal consequences, how to structure that decision properly, and […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
