**The Inner Workings of SBA Loan Forgiveness and the Latest in COVID-19 Care Act Updates**

What’s Up with the CARES Act?

Pretty sure you’ve heard about the Coronavirus Aid, Relief, and Economic Security (CARES) Act, right? The big guns at Congress pushed this one out, got a big tick from the President, and voila! Part of this landmark legislation is the Paycheck Protection Program, aka “PPP”. The PPP loans are purely a result of Uncle Sam’s generosity aimed at helping small businesses. They’re designed to maintain payroll levels and offer partial loan forgiveness! Sounds like a deal, doesn’t it? The loans are up for grabs until June 30, 2020, for eligible companies covering expenses like:

– Payroll
– Health care benefits and related insurance premiums
– Employee compensation (with certain limitations and exclusions, of course)
– Mortgage interest liabilities (excluding the principal)
– Rent and utilities
– Interest on debt incurred prior to the loan

PPP Loan Forgiveness FAQs

Lawscape and the Lawscape have this neat info for you. On August 11, 2020, SBA answered a slew of questions about the PPP Loan Forgiveness process. [Check their FAQs](https://www.sba.gov/document/support–faq-lenders-borrowers) and get your queries sorted!

Small businesses stumbling over the PPP loan forgiveness process can rely on this top-drawer resource Biz2Credit has developed. Their [PPP loan forgiveness tool](https://www.pppforgivenesstool.com/) is up for grabs, absolutely charge-free.

Thinking of applying for loan forgiveness for the SBA PPP Loan program? Simply fill in the [U.S. Small Business Administration Form 3508](https://www.sba.gov/sites/default/files/2020-05/3508%20PPP%20Loan%20Forgiveness%20Application%20%28v1%29-508.pdf).

All Things SBA Loan

Alright, now let’s talk about the SBA loan. You’ve heard of the United States Small Business Administration, right? These guys are a lifeline for small businesses across America, offering learning resources and funding opportunities. Among their crowd favorites is the SBA loan program!

Several flavors of SBA loans exist to help businesses meet their goals – whether that’s purchasing new equipment or grabbing a piece of land. These loans often help businesses grow, and the profits are used to pay back the amount borrowed. But, every so often, things don’t go as planned.

Nearly 1 in 6 SBA 7(a) loans end up in default. In such cases, owners may decide to apply for SBA loan forgiveness and hopefully lighten their debt load.

Decoding SBA Loan Forgiveness

So what is an SBA Loan?

In a nutshell, an SBA loan is a small-business loan handed off by the U.S. Small Business Administration to lending banks or other participating institutions.

Loans of $150,000 or less carry a guarantee of up to 85%, while for loans exceeding $150,000, the guarantee drops to up to 75%.

The U.S. is home to four primary types of SBA loans including:

– Microloans of up to $50,000 mainly for starting a business, acquiring equipment or inventory, and maintaining working capital.
– The 7(a) loan program is the vintage SBA loan program with a federal guarantee on loans up to $5 million.
– The 504 loan program maxes out at $5 million for purchasing facilities, land, and machinery.
– Disaster loans of up to $2 million available for small businesses affected by emergencies.

Guess what’s America’s favorite? That’s right, the classic 7(a) lending program.

Who Needs SBA Loan Forgiveness?

Real talk – not every business that takes out an SBA loan ends up in the winner’s circle. If your business is struggling to break even and if you default on the SBA loan, SBA loan forgiveness might seem like a silver lining.

Navigating SBA Loan Forgiveness Program

Now, how does the SBA Loan Forgiveness Program work, you ask? Well, if a business owner defaults on their SBA loan, they can apply for loan forgiveness. But hold up – this isn’t a rubber-stamp process. Both your case and the matter are evaluated by the SBA and discussed with the lender.

The SBA then purchases back between 50-85% of the loan and then turns to the business to collect the debt. So how’s the debt recovered?

There are two channels – the Treasury Offset Program (TOP) and cross-servicing. TOP works by recuperating the debt using the business or guarantor’s income tax refund. Cross-servicing entails the SBA boo-hooing the delinquent loans to the U.S. Department of the Treasury’s Bureau of the Fiscal Service.

The Catch with SBA Loan Forgiveness

Alright, so is there a downside to SBA Loan Forgiveness? Yes, there is. While it may seem like a lifesaver when your business is drowning in debt, there are drawbacks to consider.

Don’t Do it Solo!

Emerging from the labyrinth of SBA loans and figuring out what to do if you default on one can be tough. Lawscape and the Lawscape can guide you through it all! They’ve got tried-and-true, nationwide experience negotiating SBA debts and helping businesses file for bankruptcy.

If you’re in a jam for more than $30,000, get in touch with the Lawscape today for an SBA loan case evaluation. Trust us; you don’t want to face your SBA or Treasury debt problems alone!