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Implementation of Section 1112 Act Subsidy for Certain Loan Payments

Frequently Asked Questions

What are SBA subsidy or relief payments under the CARES Act?

The CARES Act provided for the SBA to make subsidy relief payments for small businesses that have SBA loans that are in regular servicing (the borrower’s SBA loan has not been defaulted and accelerated by the SBA lender). The amount of subsidy relief payments made to the lender by the SBA on the borrower’s SBA loan will be six months of the borrower’s principal and interest payments.

Who is eligible for the SBA relief payments under the CARES Act?

  • SBA 7(a) loans that were in “regular servicing status” in accordance with SBA loan program requirements. Generally, a loan in regular servicing status should not include any loan that is more than 120 days past due (from the first payment due date after March 27, 2020).
  • If your loan was in “approval status” (governed by SOP 50 10) prior to March 27, the funds must be fully disbursed by Sept. 27, 2020, to be eligible for relief payments.
  • The SBA subsidy payments that cover your SBA principal and interest payments include new SBA loans if: (a) your SBA loan is closed and funded between March 28, 2020, and Sept. 27, 2020, and (b) the loan funds are fully disbursed by Sept. 27, 2020.

How long will the SBA make payments on my loan?

The SBA will make six payments of principal and interest on all eligible loans.

What if I have escrow included in my normal monthly payments?

Escrow payments are not covered by the SBA relief payment program and you will need to continue to make those payments accordingly.

What if I send in a payment on my loan and my loan qualifies for the SBA relief payments?

You will have the option of having the payment returned to you or have it applied as a payment to principal after the payment from the SBA is applied to the loan.

When will the payment from SBA be applied to my loan?

  • Payments will be applied when received from SBA before the end of each month.
  • There may be factors that impact timing of payment application. If you have questions, contact SBA servicing at SBAServicing@StearnsBank.com or call 888-320-2899.

How will I know when to start making payments on my loan?

After six payments of principal and interest have been applied, your loan payment requirements will resume as originally scheduled. If you have questions specific to your loan please contact SBA servicing at SBAServicing@StearnsBank.com or call 888-320-2899.