News Alerts from
STATUS ON SBA 7(a) STIMULUS PROVISIONS
The SBA 7(a) program has been operating under stimulus provisions which include a maximum guaranty of 90% and no guaranty fee, as well as no ongoing service fee (previously .55% of the guaranteed portion of the outstanding balance). These specific provisions are scheduled to expire on 09-30-21 or when funding runs out. After these provisions expire, the SBA will reinstate previous fees required under the normal operations of the 7(a) program.
Based on current usage, it is now expected that the 7(a) stimulus provisions will be fully expended by 09-15-21. These expectations could possibly be affected by the current infrastructure bill that is working its way through the legislative process. The bill, which was passed by the Senate on 08-10-21, includes a provision which rescinds these stimulus provisions immediately. Additional provisions of the infrastructure bill would allow the SBA Administrator to replace the lost funds with dollars appropriated for the EIDL loan program. We are not sure this legislation will become law before the stimulus provisions for SBA loans expire. We are monitoring it on a daily basis.
Where Does This Leave SBA Lenders?
So, what does this mean for active SBA lenders? Simply put, we here at Holtmeyer & Monson believe that 7(a) applications being processed on a General Program (GP) basis, which are not successfully submitted by Friday 08-20-21, will have little chance of being authorized before stimulus funds run out. We believe that the “drop dead ” date for getting Preferred Lender Program (PLP) applications approved with the stimulus provisions will be about 09-01-21.
Our best advice is to act quickly to get pending 7(a) loan applications submitted for approval. Also, it is critical to communicate with SBA borrowers that we are quickly approaching the point at which their pending loan application may be approved, but with the normal fee structure included. Our Account Executives will begin communicating with lenders and borrowers regarding this potential change, and we will immediately revert to including standard fees in all new 7(a) applications as we structure transactions.
Holtmeyer & Monson will continue to keep our readers informed of any additional breaking developments in this critical program.