In addition to the $349 billion Paycheck Protection Program (the “PPP”), the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) created a separate $17 billion program to help borrowers with existing loans under
- the Small Business Administration’s 7(a) loan program (loans to small business concerns);
- the Small Business Administration’s 7(m) loan program (microloans to women, low-income, veteran and minority entrepreneurs and business owners); and
- Title V of the Small Business Investment Act (loans to state and local development companies) (each a “covered loan”).
This program does not extend to loans made under the PPP because the PPP already provides similar payment deferrals for loans made under that program.
Under the terms of this $17 billion program, the Small Business Administration will pay six (6) months of principal, interest and associated fees on a covered loan that is in regular servicing status. If the covered loan is currently on deferment, then the six (6)-month period will begin after the completion of the ongoing deferment.
Once the Small Business Administration has made a payment on a covered loan, the borrower is no longer required to repay such amount.
For information related to the Paycheck Protection Program, under the CARES Act, please visit "What You Need to Know to Understand the Payment Protection Program."
For further information related to small business loans under the CARES Act, or to further explore the impact of the coronavirus on your business, please contact your main Glaser Weil partner, or contact Glaser Weil’s COVID-19 Taskforce at firstname.lastname@example.org.
This article has been prepared by Glaser Weil LLP and is intended for informational purposes only. It is not legal advice and its transmission is not intended to create, and receipt by you shall not constitute, the creation of an attorney-client relationship. While we have attempted to provide information as accurately and timely as possible, it is not intended to be a full discussion of all aspects of the subject matter and applicable in all jurisdictions. It is not a substitute for legal advice from a qualified attorney licensed in the appropriate jurisdiction and with knowledge of your particular facts and objectives. Glaser Weil LLP expressly disclaims all liability with respect to actions taken or not taken based on the contents of this article and urges you to contact us or any other qualified attorney to discuss in greater detail your legal situation.