SBA extends payment period for PPP, COVID loan borrowers
The U.S. Small Business Administration (SBA) has announced increased flexibility for COVID-19 Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP) borrowers, aiming to help them comply and avoid the consequences of defaulting on a government loan.
In Puerto Rico, 70,197 PPP loans were disbursed, totaling nearly $2.78 billion, with more than $2.75 billion already forgiven and $24 million pending repayment.
All EIDL borrowers are obligated to repay their loans, but the SBA offers support through expanded hardship accommodation plans. These plans can reduce monthly payments significantly, sometimes to as low as $25 for the initial six months, with a gradual increase over an extended period.
Under the EIDL, 30,112 loans totaling $4.1 billion were approved, Resident Commissioner Jenniffer González confirmed.
The SBA is offering a 60-day grace period from Jan. 1 to March 3 for EIDL and PPP borrowers with loans under $100,000.
“During this period, the SBA will build on its outreach to affected businesses to ensure that PPP borrowers know how to apply for forgiveness and COVID EIDL borrowers are aware of all repayment options – including the opportunity for hardship repayment plans,” the agency stated. “Further, the SBA will refrain from escalating collections activities until after the goodwill exemption period.”
For small business borrowers who are delinquent or in default, rectifying their status with the SBA will significantly improve their long-term financial prospects, the agency added.
“The benefits of getting, and staying, current on SBA loans include better credit scores, which make it cheaper and easier to buy a home or car in the future; eligibility for future government financial assistance, like a VA loan or help after a natural disaster; and, in some cases, avoidance of federal and private collections activities which can include withholding tax returns and wage garnishment,” it noted.
Hundreds of thousands of PPP borrowers can avoid default without repaying the loan. Those who have met the payroll requirements can complete the PPP forgiveness application, “which takes most borrowers less than 15 minutes,” the agency stated.
Borrowers can verify the status of their PPP loans by logging into the MySBA loan portal, where forgiven loans will be listed as “paid in full.”
Those with PPP loans that have not been forgiven should apply for forgiveness promptly, with instructions available on the SBA website.
