Important Information Regarding the 2021 Consolidated Appropriations Act

Dec 23, 2020

The recently approved Consolidated Appropriations Act is a very new and complex bill that will have a huge impact on our current small business and lending partners. Dakota Business Lending would like to share some information we have received from our national association and give you the most recent update. We will be sure to inform you of more updates and information as we learn more.


Congress has passed a $900 billion COVID relief package combined with the $1.4 trillion government-wide funding under the 2021 Consolidated Appropriations Act. The combined legislation now heads to the President who is expected to sign it into law. The COVID relief portion of the legislation includes many small business provisions including:

EXTENSION OF CARES ACT PAYMENT SUBSIDIES

The legislation continues this vital relief by resuming the payment of principal, interest, and fees on small business loans guaranteed by SBA under the 7(a) [including Community Advantage], 504, and Microloan programs as originally established in the CARES Act.

  • All borrowers will receive an additional three months of payment assistance starting in February 2021, capped at $9,000 per borrower per month
  • After the three-month period, borrowers considered underserved will receive an additional five months of payment subsidies capped at $9,000 per borrower per month, including: Borrowers with SBA Microloans or Community Advantage loans, and Borrowers with any 7(a) or 504 loan in hardest-hit industries, including food service and accommodation; arts, entertainment, and recreation; education; and laundry and personal care services
  • Payment subsidies for six months will resume for new loans approved from February 1 to September 30, 2021, capped at $9,000 per borrower per month

504 DEBT REFINANCING FIXES

The legislation provides substantial improvements to 504 debt refinancing including:

  • Strengthening 504 debt refinance with expansion by increasing the debt refinance amount from 50% to 100% of expansion costs
  • Strengthening 504 debt refinance without expansion by allowing the refinance of government guaranteed debt, allowing the refinance of a Qualified Debt that is 6 months old (down from 2 years), and dropping the requirement that the business must be current on all payments due for 12 months (converting this to a credit underwriting consideration rather than an eligibility barrier to the program)
  • Allowing the refinance of Third Party Lender loans in an existing 504 project to include cash-out for business operating expenses to assist small businesses leverage existing equity capital to fund business operating and recovery expenses

504 EXPRESS LOAN PROGRAM

The legislation grants CDCs approved under SBA’s Accredited Lenders Program (ALP) with express loan authority to approve, authorize, close, and service 504 loans up to $500,000 to speed critical access to capital to small businesses. Dakota Business Lending is one of the several ALP lenders across the Country that will be able to move in this direction once we receive more information from SBA.

TEMPORARY FEE ELIMINATION FOR THE 504 LOAN PROGRAM

The legislation eliminates the 0.5% SBA Participation Fee and the 1.5% CDC Processing Fee in debenture pricing for all loans approved from the date of enactment of the Act and ending on September 30, 2021. The CDC fee is offset with an appropriation to pay the CDC for the waived fee.


While a second round of debt relief payments to all our existing borrowers is positive at this time of the year and as the pandemic has dragged on, equally positive is the refinance enhancements and addition of the express loan program. It is important to note that it will take time for SBA to implement the Act into regulations and policy. We will provide updates as additional information is available.

We appreciate the opportunity to serve you and wish all of you a very Merry Christmas and a blessed New Year.

MORE INFORMATION ON THE CONSOLIDATED APPROPRIATIONS ACT