SBA Debt Relief Program Important Update: Extension of the SBA Debt Relief and Loan Payment Program


Adjustment to Number of Months of the Coronavirus Aid, Relief and Economic Security Act (CARES Act) Section 1112 Payments, Provided by SBA

Effective January 19, 2021, the SBA has adjusted the number of months payments will be provided to lenders on behalf of borrowers, under Section 1112 of the CARES Act as follows:

A. Newly Eligible First Round Loans

For a 7(a) or a 504 loan that was approved on or before September 27, 2020 and fully disbursed on or after September 28, 2020 (referred to as “Newly Eligible First Round Loans” in Procedural Notice 5000-20079), SBA will make the Section 1112 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.)

B. Second Round Section 1112 Payments for 504 and 7(a) Loans

  1. For all 504 and 7(a) loans (except for loans made under the Community Advantage Pilot Program, referred to hereafter as Community Advantage Loans) that were approved before March 27, 2020, SBA will make the Section 1112 payments for a 2-month period (instead of a 3-month period). This 2-month period of Section 1112 payments may cover amounts that are past due at the time that SBA makes the February Section 1112 payment, subject to the monthly payment limit of $9,000.
  2. If the 504 or 7(a) loan is made to a borrower that, according to the records of SBA, is assigned a North American Industry Classification System code beginning with 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812, SBA will make the Section 1112 payments for an additional 3-month period (instead of an additional 5-month period) immediately following the end of the 2-month period provided in paragraph B.1 above. SBA will not begin to make the payments for this additional 3-month period until SBA provides to 7(a) Lenders and CDCs a list of their respective borrowers with each borrower’s assigned NAICS code.

As part of the legislation passed December 20, 2020 on the U.S. Coronavirus Aid, Relief and Economic Security ACT (the CARES Act), the U.S. Small Business Administration (SBA) will provide a second round of payment relief to qualified SBA borrowers for a three (3) month period, beginning February 1, 2021.

For SBA 504 and 7(a) loans, under this program the SBA will remit monthly payments (up to a maximum of $9,000 per payment) for qualified SBA borrowers, directly to their lender; for an additional three month period beginning with the first payment due on the loan on or after February 1, 2021. For any loan that is continuing to receive the first round debt relief payments on or after February 21, 2021, this 3-month period for the second round payments does not begin until the first month after the SBA has completed the first round payments on that loan.

For a loan that was approved before March 27, 2020 and is on deferment, SBA will make the second round payments for a 3-month period (beginning on or after February 1, 2021) beginning with the later of (a) the next payment due on the covered loan after the deferment period; or (b) the first month after SBA has completed the first round payments.

If your regular SBA loan payment amount is greater than $9,000 per month, you will be contacted by your assigned EHPB loan officer to coordinate reconciliation of the payment amount that is not covered by the SBA during the payment relief period.

If your SBA loan is currently setup for automated ACH payments, your assigned EH Private Bank loan officer will be in contact with you to coordinate options to continue all or a portion of your payments to pay-down your loan principal or to terminate your ACH payments during the payment relief period.

013-215-1.2 021921

Information Regarding Taxation of Loan Payments Made by SBA on Behalf of Borrowers:

Effective: January 28, 2021 - Section 278(c) of the COVID-related Tax Relief Act of 2020, enacted on December 27, 2020, provides that any payments related to and described in this act (provided by the SBA to lenders, on behalf of borrowers) shall not be included in gross income of the person on whose behalf such payment is made.

Lenders have been instructed not to file or furnish Form(s) 1099-MISC with respect to these loan payments.

Based on previous guidance prior to December 20, 2020, Form 1099 forms were provided to some borrowers prior to this updated and current ruling, dated January 28, 2021. If you received a Form 1099-MISC Miscellaneous Income notice from us, please disregard it, as these payments are not taxable.

If you have questions regarding your tax return or tax code, please consult your tax advisor or accountant.

f you have any questions or need additional information about the SBA Debt Relief program or your loan with us, please contact your assigned EH Private Bank loan officer or call our Commercial Lending Office at (800) 975-0901. You can also email us at

Thank you!

013-215-1.1 020121