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Beyond PPP: The New Stimulus Bill Contains Other Forgivable Loan Options for Small Businesses


The new COVID-19 pandemic relief bill is thousands of pages long, but a few aspects of it have attracted the lion’s share of the media coverage.  Which individuals will get another round of direct stimulus payments?  How much money will these payments be, and how soon will they be in people’s bank accounts?  Small business owners who received Paycheck Protection Program (PPP) loans in 2020 were on the edge of their seats, waiting to find out if their current loans would be forgiven and whether they were eligible for a second loan.  With all the focus on these talking points, it would be easy for small business owners not to notice the opportunities for small business loans, some of them forgivable, contained in the provisions of the economic stimulus legislation.  A Washington DC small business lawyer can help you find needed funding for your small business.

Section 7(a) Loans for Small Businesses

Section 7(a) loans, which are issued by Small Business Association (SBA) lenders, have been around since before the COVID-19 pandemic.  Here are some of the features of Section 7(a) business loans:

  • To be eligible, a business must be based in the United States and have 500 employees or fewer.
  • Eligible businesses cannot have more than $7.5 million in average annual gross income.
  • You can borrow up to $5 million and spend it on business acquisitions, working capital, equipment, and inventory.
  • Some Section 7(a) loans have fixed interest rates, and some have variable interest rates.
  • Being delinquent on debts owed to the government disqualifies you for eligibility for Section 7(a) loans.
  • The term of the loan can range from seven to 25 years, depending on how the recipient plans to use the loan money.

The 504 Microloan Program

The SBA instituted the 504 Microloan program long before the COVID-19 pandemic, in order to create jobs.  The eligibility requirements and loan amounts for the 504 Microloan program are similar to those for Section 7(a) loans.  Here are some important ways that the 504 Microloan program differs from the Section 7(a) program:

  • You can use the money to buy real estate for your business, improve buildings that your company already owns, and buy equipment.
  • The interest rates are always fixed.
  • The term of repayment can vary from 10 to 20 years.

What the New Stimulus Bill Says About These Loans

The new stimulus bill contains good news for small business owners who have already borrowed Section 7(a) loans or 504 Microloans.  Almost all borrowers can apply to have three months of principal and interest forgiven, up to $9000 per month.  Borrowers in industries hit especially hard by the pandemic, such as hospitality, recreation, and laundry services can apply for an additional five months of loan forgiveness.  If you apply for a new loan before September, the first six months will be forgivable.  Best of all, the loan application does not require you to prove that your need for the loan is a direct result of the pandemic.

Let Us Help You Today

Sometimes the funding you need the most is not the most well publicized kind, and a Washington DC small business law attorney can help you find it.  Contact Tobin O’Connor Concino P.C. for a consultation.



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