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Payment relief CARES Act coverage

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is the largest stimulus package in modern history. Here’s how it could help support your business in these difficult times.

CARES Act FAQ for business owners

These FAQs have been revised to include updated information from the SBA’s February 16, 2021 Payment Adjustment Plan.  The SBA has reduced the number of months it will provide Section 1112 payment relief to eligible 7(a) borrowers.

Please note that Truist is unable to make any representations or guarantees about SBA’s intended administration of the Section 1112 payment relief program or the continued availability of funding. We will continue to post updated information on the Truist website as it becomes available. 

The CARES Act was amended on 12/27/2020 to provide additional economic relief from the pandemic. These amendments include supplemental funding to the SBA for the Section 1112 payment relief program, which provides debt relief to SBA borrowers in the 7(a), 5041 and Microloan programs.  Certain Truist borrowers with 7(a) loans that are fully disbursed and in regular servicing qualify for an initial three months or six months of regularly scheduled principal and interest payments under the CARES Act, and a subset of our 7(a) borrowers are also eligible for additional payment relief.  The SBA has published guidance for its administration of the extended Section 1112 Payment Relief Program, and Truist will share updated servicing details in a targeted notice letter to affected 7(a) borrowers in the coming weeks.  In addition, the SBA has provided a letter to eligible borrowers containing general information about the expanded 1112 payment relief program. 

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The following Truist Bank borrowers with 7(a) loans that are fully disbursed and in regular servicing are eligible to receive regularly scheduled payments of principal and interest on their  loan (“First Round”), commencing with the first scheduled payment following closing and full disbursement of their loan.  For eligible borrowers on deferment, these First Round payments begin with their first scheduled payment following the deferment period. 

  • Borrowers with 7(a) loans that were approved prior to September 27, 2020 but were not fully disbursed until after September 27, 2020 will receive three months of regularly scheduled payments that will be directly applied to their loan.  This group of Truist borrowers is newly eligible to receive Section 1112 payment relief.  

  • Borrowers with 7(a) loans that were approved and fully disbursed prior to September 27, 2020 will receive six months of regularly scheduled payments that will be directly applied to their loan.   Many Truist borrowers in this subset have received most, if not all, of their First Round of payment relief.

  • Borrowers with 7(a) loans that are approved by the SBA between February 1, 2021 and September 30, 2021 will receive three months of regularly scheduled payments that will be directly applied to their loan. The SBA has capped its monthly payments for this subset of loans at $9,000, and borrowers will be expected to pay any remaining amounts owing during these months to Truist in accordance with the provisions of their promissory note.  Please note that no Truist borrower will be able to obtain payment relief for a newly approved loan in this category if the same borrower has already received First Round payment relief for a loan that was approved between March 27, 2020 and September 27, 2020. This single-loan exception does not apply to loans made to a borrower’s affiliates.

The following Truist Bank borrowers with 7(a) loans that were approved prior to March  27, 2020, are fully disbursed, in regular servicing, and have received the First Round of payment relief are eligible for the Second Round and, potentially, the Extended Second Round of payment relief.  For eligible borrowers on deferment and who have already received the First Round payments, the Second Round payments (and, if applicable, the Extended Second Round payments) begin with the first scheduled payment following the deferment period.

  • Borrowers will receive an additional two months of regularly scheduled payments that will be directly applied to their loan (“Second Round”), commencing with the first scheduled payment due on or after February 1, 2021, following completion of the First Round payments.  The SBA has capped its monthly Second Round payments at $9,000, and borrowers will be expected to pay any remaining amounts during these months to Truist in accordance with the provisions of their promissory note. 
  • Borrowers may receive an additional three months of regularly scheduled payments applied directly to their loan if the borrower is in one of the specifically identified NAICS business segments (“Extended Second Round”), following completion of the Second Round payments.  The fifteen identified NAICS codes target businesses such as arts and entertainment, hospitality and restaurants, personal services, and transportation companies.Please note that Truist will notify any borrower that is included in the Extended Second Round after it receives further information from the SBA.  The SBA has capped its monthly Extended Second Round payments at $9,000, and borrowers will be expected to pay any remaining amounts owing during these months to Truist in accordance with the provisions of their promissory note.

Congress did not extend the Section 1112 payment relief to 7(a) loans that were approved by the SBA during this time period.  We do not know the reasoning behind this decision. Even though your loan may not be eligible for Section 1112 relief, Truist may be able to offer additional relief, including providing a deferment of your regularly scheduled loan payments. Please let Truist know if you would like to request a deferment.

If you are entitled to initial or extended relief under the Section 1112 payment relief program, no further action is required to participate in the program. You will continue to receive monthly statements during this time; and Truist may contact you regarding any special circumstances related to your loan and the payment relief, including whether you would like to suspend any current deferment. If your loan has a monthly payment greater than $9,000 and is included in the subset of loans with limited SBA relief, you are expected to continue to make regular payments to Truist for the portion of your monthly payment that exceeds this cap. 

Please note that only the guaranteed portion of a Section 504 loan is eligible for Section 1112 payments, and you will need to contact the applicable CDC to discuss Section 1112 payment relief.

No, the Section 1112 payment relief program is not available for any PPP loans.

The SBA has mandated that any 7(a) loan that is otherwise eligible for Section 1112 payment relief must be fully disbursed and in regular servicing to receive the payments. Once your loan has been fully disbursed, and to the extent it is otherwise eligible for 1112 payment relief (as outlined in FAQ 1. above), you will be eligible to participate in the Section 1112 program.

  • Do I have to make a payment?   Truist will continue to send monthly invoices to you during any period you are entitled to payment under the extended Section 1112 program; however, Truist will suspend any automatic debit to your deposit account for regularly scheduled loan payments (to the extent this suspension has not already occurred in connection with a deferral).  Any ACH instructions or other written authorization will remain in place, however, and shall resume with the next regularly scheduled payment following the last month you receive Section 1112 relief payment.
  • If I’ve already made my February payment, can I request that it be refunded to me?  If you are entitled to initial or extended relief under the Section 1112 payment relief program, you may choose to have this payment refunded to you by submitting a servicing request. Otherwise, Truist will apply this payment to further reduce your loan balance. Truist has provided servicing details in a targeted notice letter to its 7(a) borrowers.

Please refer to FAQ 2. above.  Only 7(a) borrowers with a loan that was approved prior to March 27, 2020 (the date the CARES Act was implemented) are entitled to extended relief under the amended provisions. You may, however, be entitled to a deferment of the regularly scheduled principal and interest on your 7(a) loan.  Please let Truist know if you would like to request a deferment.

The SBA will provide Section 1112 payment relief for all eligible 7(a) loans that are in regular servicing.  SBA guidance suggests that Truist may apply this payment relief retroactively in the case of certain loans that may be past due by several months but are not categorized under SBA guidance as “in liquidation”. Please Note: If you are eligible for Second Round payments, you are still responsible for the January and February payments on your loan after application of the Second Round 1112 payment relief to your past due November and December payments. Please refer to FAQ 2. above for further information on Second Round payments, including the $9000 monthly payment cap.

Under the CARES Act, Truist Bank provided our SBA clients with the option to cancel any deferment for their 7(a) loans to ensure that they obtained the full six months of payment relief.  This was in part to address concerns about limited funding for the program as well as to comply with SBA 1112 guidance mandating that the payment relief period had to be continuous and uninterrupted by any deferment period.  Truist will share servicing details in a targeted notice letter to its 7(a) borrowers in the coming weeks, and you will have the option to cancel any current deferment to participate right away in the 1112 program or to remain in deferment and delay your participation.

Please refer to FAQ 1. above.  If your existing 7(a) loan was approved between March 27, 2020 and September 30, 2020, your new 7(a) loan is ineligible for any Section 1112 relief payments. Congress limited the number of 7(a) loans eligible for payment relief under Section 1112, and we do not know the reasoning behind certain of the eligibility requirements. Even though your new loan may not be eligible for Section 1112 relief, Truist may be able to offer additional relief. 

The SBA has additional information on its website. You may also direct loan-specific questions to your Truist banker, or, in the alternative, to one of the following Truist mailboxes: 

Disclosures

1 Only the guaranteed portion of a 504 loans is included in the Section 1112 subsidy program. Borrowers with 504 loans should contact their CDC to discuss Section 1112 payment relief.

2 Businesses must have assigned NAICS codes beginning with 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812.