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SBA Debt Relief Program — explained

With no cost for six months, this could make other SBA loans a viable alternative to the Paycheck Protection Program.

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The SBA Debt Relief Program is a temporary program meant to help businesses struggling during the coronavirus outbreak. It automatically covers interest, principal repayments and fees for most SBA loan programs for six months — including new loans.

If you expect your business to be able to handle full repayments when they're due, this program could make standard SBA loans a viable alternative to other SBA COVID-19 loan programs. Standard SBA loans have fewer restrictions on who qualifies and how you use the funds — though the rates and fees are higher.

What businesses are eligible for the SBA Debt Relief Program?

Businesses with the following types of SBA loans are eligible for the SBA Debt Relief Program:

  • 7(a) loans
  • 7(a) small loans
  • Express loans
  • Export Express loans
  • Export Working Capital loans
  • International Trade loans
  • Veterans Advantage loans
  • CAPLines
  • 504 loans
  • Microloans

This includes businesses that are currently in repayment and any new loans disbursed between March 27, 2020 and September 27, 2020.

Does the debt relief program apply to disaster loans?

Disaster loan programs for businesses that were affected by the coronavirus outbreak are not eligible for the SBA Debt Relief Program. That's because they already come with payment relief built in.

Economic Injury Disaster Loans (EIDLs) come with the option to postpone repayments for up to one year. Previously, EIDLs allowed applicants to apply for up to a $10,000 advance in the form of a grant that didn't have to be repaid, but it is no longer issuing advances. Paycheck Protection Program (PPP) loans come with six months of deferred repayments and are eligible for up to 100% forgiveness.

However, other types of disaster loans may be eligible for deferment.

What is the SBA Debt Relief Program?

The SBA Debt Relief Program covers six months of interest, principal repayments and any associated fees for qualifying SBA loans. It's a one-time program that Congress created when it passed the Coronavirus Aid, Relief and Economic Security (CARES) Act in March 2020.

What relief options are available?

Every eligible loan gets the same type of relief. However, when it begins can vary depending on the status of your loan.

  • Loans in repayment. Debt relief kicks in with repayments due after March 27, 2020, when the CARES Act passed.
  • Loans in deferment. Debt relief kicks in when your deferment period is over and your next repayment is due.
  • New loans. For loans disbursed between March 27, 2020 and September 27, 2020, debt relief kicks in when your first repayment is due.

Do I need to apply for the SBA Debt Relief Program?

No, this program automatically enrolls all eligible SBA loans. If your provider has continued collecting repayments after March 27, 2020, reach out. Legally, they're required to either return the repayment or apply it to your loan balance in addition to the debt relief payment the government is providing.

Is the SBA providing any other debt relief?

Yes, the SBA is also deferring repayments on disaster loans that were in repayment as of March 1, 2020. This includes the following types of disaster loans:

  • Noncoronavirus Economic Injury Disaster Loans (EIDLs)
  • Business Physical Disaster Loans (BPDLs)
  • SBA Military Reservist Economic Injury Disaster Loans (MREIDLs)
  • SBA Home and Personal Property Disaster Loans

Deferment runs until December 31, 2020. However, you might want to continue to make repayments if possible. Interest continues to add up and gets added to your loan balance once repayments resume — meaning you'll pay interest on interest.

Your repayments are automatically deferred unless you're signed up for preauthorized debit (PAD) or recurring repayments. Automatic repayments will continue as if your loans weren't in deferment, unless you ask the SBA to cancel them. And you'll need to sign up for PAD or recurring repayments again after the deferment period is over on December 31, 2020.

4 alternative debt relief options for businesses

You don't need to qualify for automatic debt relief to get help with your loans. Consider these other options.

  • Refinance with a disaster loan. Refinancing with an EIDL could make your current debts more affordable. EIDL rates are fixed at 3.75% for small businesses and 2.75% for nonprofits, and come with deferment and terms as long as 30 years.
  • Request deferment. Most business loan providers are offering deferment to customers who are struggling to make repayments.
  • Negotiate a new repayment plan. If you're not sure when your business will be able to afford regular repayments, talk to your servicer about extending your term or lowering your rate.
  • Refinance for a longer term. Businesses that can qualify for a new loan, but want lower repayments on their existing loan can take out a new one to pay off their current debts. This option is generally better for established businesses that have been relatively unaffected by COVID-19, but want to cut back on expenses as a precaution.

Refinance by taking out a new business loan

Data indicated here is updated regularly

Name Product Filter Values Loan amount APR Requirements
First Down Funding business loans
$5,000 – $300,000
Fee Based
At least 1 year in business, an annual revenue of $100,000+, and a minimum credit score of 400
Alternative financing up to $300K with highly competitive rates.
Lendio business loans
$500 – $5,000,000
Starting at 6%
Operate business in US or Canada, have a business bank account, 560+ personal credit score
Submit one simple application to potentially get offers from a network of over 300 legit business lenders.
ROK Financial business loans
$10,000 – $5,000,000
Starting at 6%
Eligibility criteria 3+ months in business, $15,000+ in monthly gross sales or $180,000+ in annual sales
A connection service for all types of businesses — even startups.
OnDeck small business loans
$5,000 – $250,000
As low as 11.89%
600+ personal credit score, 1 year in business, $100,000+ annual revenue
A leading online business lender offering flexible financing at competitive fixed rates.
Rapid Finance small business loans
$5,000 – $1,000,000
Fee based
Steady flow of credit card sales, bad credit OK
Fundbox business loans
$1,000 – $100,000
4.99
You must have an established business.
Get flat rate, short-term financing based on the financial health of your business, not your credit score.
Kickpay e-commerce business loans
$20,000 – $1,000,000
Not applicable
At least $250,000 in the past 12 months of revenue, e-commerce business, use a 3rd party fulfillment center for storing and shipping inventory, at least one US location.
Get a loan for your e-commerce business based on your sales history.
LendingClub business loans
$5,000 – $500,000
12.15% to 29.97%
12+ months in business, $50,000+ in annual sales, no bankruptcies or tax liens, at least 20% ownership of the business, fair personal credit score or better
With loan terms that vary from 12 to 60 months, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.
Monevo business loans
$500 – $100,000
3.99% to 35.99%
Credit score of 500+, legal US resident and ages 18+.
Use this connection service to get paired with a loan you can use for business.
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Bottom line

The SBA Debt Relief Program automatically covers repayments on current SBA loans and could potentially make new SBA loans more affordable if you need financing to reopen your business.

But you'll still need to meet the SBA's strict requirements, and you might not receive your funds for months. Learn about your other financing options during the coronavirus outbreak by visiting our guide to business loans during COVID-19.

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