SBA loans may be eligible for debt relief assistance under Section 1112 Debt Relief Program of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act).
For borrowers with eligible SBA business loans1, monthly loan payments will be paid by the SBA to the lender. Eligible SBA loans include SBA 7(a), 504 and Microloan Programs. SBA 7(a) loans include Standard 7(a), SBA Express, 7(a) Small Loan, Export Express, Export Working Capital, International Trade Loans, Veterans Advantage, and CAPLines. This assistance is not available to loans made under the Paycheck Protection Program.
Debt relief assistance for 7(a) loans for Santander customers will be administered by the bank, while 504 and Microloans2 are administered by the Certified Development Company 504 lender or Microlender that originated the loan.
For Santander SBA 7(a) Loan Customers:
Santander will review our customer’s SBA 7(a) loans to determine eligibility for debt relief assistance. If it is determined a customer’s 7(a) loan is eligible, Santander will request to the SBA to make monthly loan payments (including the principal, interest and certain associated fees) directly to Santander on the customer’s behalf for a certain number of months3. Please note that the number of months for which an SBA borrower may receive this assistance is subject to adjustment based on the availability of funds provided by Congress.
Santander customers with 7(a) loans eligible for monthly payments do not need to take any action to have the SBA make payments on their behalf. For eligible Santander SBA 7(a) customers scheduled for autopayment, the bank will remove their autopay service beginning on February 1st. SBA is scheduled to make payments on their behalf on or about the 15th of each month and the payment will be applied to their loan shortly thereafter. SBA borrowers with loan payments more than $9,000 per month will be responsible for paying any amount over $9,000 and the bank will contact these 7(a) borrowers with additional information on how to remit these payments.
Eligibility Criteria and the Amount of Monthly Payments:
IMPORTANT CHANGES: SBA determined that there was insufficient funding to make the payments for the periods originally authorized by Section 1112(c)(1) of the CARES Act, as amended by Section 325 of the Economic Aid Act. As such, SBA developed a plan to proportionally reduce the number of months provided for each category of loans. Details on the adjustment of the payments can be found in SBA Procedural Notice 5000-20095. Details below were modified to reflect these adjustments.
- SBA Loans Approved, but not yet Disbursed, on or Before September 27, 2020: The SBA will make monthly payments for loans approved on or before September 27, 2020 but were not yet disbursed as of September 27, 2020. These loans were not previously eligible for payment under Section 1112 of the CARES Act, but the SBA will now make these payments for a 3 Month Period (instead of a 6-month period). (Note that, for loans that were approved and fully disbursed on or before September 27, 2020, SBA will continue to make the Section 1112 payments for a 6-month period, as authorized under the original CARES Act.)
Monthly payments will begin in February or after full disbursement of the loan if that has not yet occurred (or beginning with the next payment due after any deferment period granted your loan).
- Loans Approved Before March 27, 2020: The SBA will make monthly payments for an additional 2-month period (instead of a 3 month period) beginning with the next payment due on or after February 1, 2021 (or beginning with the next payment due after any deferment period granted your loan).
NOTE: If a business is assigned a North American Industry Classification System code (NAICS) beginning with 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812 (seewww.naics.comfor listing of codes), the SBA will make regular monthly loan payments for an additional 3-month period (instead of an additional 5-month period) immediately following the end of the 2-month period, for a total of 5 months.
- No single monthly payment that the SBA makes for these loans will exceed $9,000.
- No Second Round 1112 Payments for Loans Approved Between March 27, 2020 and September 27, 2020.
A loan that was approved during the period beginning on March 27, 2020 and ending on September 27, 2020 is eligible for the first round of Section 1112 payments either for a 6-month period if the loan was fully disbursed on or before September 27, 2020 or for a 3-month period if the loan was fully disbursed after September 27, 2020. Under the Adjustment Plan, no other Section 1112 payments will be made for these loans.
- SBA Loans Approved Beginning on February 1, 2021 and Ending On September 30, 2021: Subject to availability of funds, the SBA will make borrower monthly payments for a 3-month period (instead of a 6-month period) beginning with the first payment due on the new loan after full disbursement. No single monthly payment that the SBA makes for these loans will exceed $9,000. Businesses are not eligible for this assistance on this new loan if the business has received (or will receive) debt relief on any other 7(a) loan, 504 loan, or Microloan that was approved on or after March 27, 2020 and ending on September 27, 2020.
SBA Loans On Deferral:
If the SBA borrower’s loan is currently on deferral, SBA payments will not begin until the deferral period ends. However, a borrower may take their loan off deferral to begin receiving the SBA payments. If you wish to take your loan off deferral, speak with your Santander banker or call Customer Service at 877-768-1145, Monday to Saturday 8:00 am to 8:00 pm ET, and Sunday 9:00 am to 5:30 pm ET for assistance.
Please visit the SBA website to learn more about this debit relief assistance program. You can also speak with your Santander banker or call Customer Service for assistance.
1Loans must be fully disbursed and in a regular servicing status and not defaulted and moved into a liquidation status. Loans approved between September 28, 2020 and January 31, 2021, and those in liquidation status are not eligible for SBA payments.
2Certified Development Companies will facilitate payments for SBA 504 loans. Santander Bank does not participate in SBA Microloans, since these are administered directly by an SBA Micro-Lender. Santander is referencing 504 and Microloan loans for informational purposes only.
3The Economic Aid Act limits payments on certain SBA eligible loans to a maximum amount of $9,000 per month.