In February 2024, the Small Business Administration (SBA) expanded the eligibility of its Hardship Accommodation Plan (HAP), offering a significant relief option for COVID-19 EIDL borrowers grappling with loan payments during the post-pandemic recovery period.

Key Features of the HAP:

  • Flexible Payment Options: Eligible borrowers can pay just 10% of their regular payment amount for six months. This reduced payment scheme is especially beneficial for those who have not been able to catch up on missed payments.
  • Interest Accrual: While the plan allows for reduced payments, interest will continue to accrue. Borrowers should be aware that this could potentially increase the total amount due at the end of the loan term.
  • Renewal Possibility: After the initial six-month period, borrowers have the option to renew the accommodation, subject to approval and potentially altered terms.

Eligibility Criteria:

  • The plan is accessible to all borrowers who are in the repayment phase, including those who are past due or even in default (up to 120 days late). However, loans that have been escalated to the Treasury for collection are not eligible.

Enrollment Process:

  • Borrowers can enroll in the HAP starting 60 days before their next payment is due. The process varies slightly depending on the loan amount:
    • Loans ≤ $200,000: Borrowers can enroll directly through the MySBA Loan Portal.
    • Loans > $200,000: Enrollment must be facilitated through contact with the COVID-19 EIDL customer service.

Important Considerations:

  • Maintaining payments during the hardship period is crucial as missing payments can lead to default. The SBA recommends setting up autopay to mitigate the risk of missed payments.
  • Borrowers should understand the long-term implications of accruing interest and the potential increase in the balloon payment at the end of the loan term.

The SBA’s Hardship Accommodation Plan is a testament to the ongoing support for small businesses facing temporary financial hurdles. By providing flexible repayment options, the SBA is helping ensure that businesses have the necessary support to recover and thrive in a challenging economic environment. For more details or to apply for the HAP, borrowers should visit the MySBA Loan Portal or contact the SBA customer service.

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