Small Business Pandemic Debt Relief Programs

The COVID-19 global pandemic has fundamentally altered the way business is being done. Moreover, it has also created a very difficult environment for certain types of businesses. As a result, more small businesses are in trouble than at any other time in recent history. Fortunately though, there are a number of small business debt relief programs available to provide some assistance in these trying times. 

SBA Debt Relief Programs

Microloans, 7(a) and 504 – The U.S. Small Business Association is providing 7(a), 504 and Microloans assistance encompassing up to six months missed payments, as long as those loans are in regular servicing status. However, it should be noted, businesses availing themselves of the Paycheck Protection Program and Economic Injury Disaster Loans will not qualify for this assistance. With that said, assistance is provided automatically if your business does qualify. 

Disaster Home and Business Loans – Automatic deferrals for recipients of SBA Serviced Disaster (Home and Business) Loans were granted. If your loan was set up for automatic payments, you must cancel them if you’re planning to take advantage of the deferment. It should be noted interest continues to accrue during the deferment period, but your credit rating won’t be adversely affected by opting for it. 

Borrowers are advised to get in touch with their Loan Servicing Offices using the following contact information if they are unsure of their status.

  • Birmingham Disaster Loan Servicing Center: 
    • Phone: 800-736-6048
    • Email: BirminghamDLSC@sba.gov
  • El Paso Disaster Loan Servicing Center: 
    • Phone: 800-487-6019
    • Email: ElPasoDLSC@sba.gov

Additional SBA relief options include the Paycheck Protection Program, which provides loan forgiveness for employers retaining workers during the pandemic.  SBA Express Bridge Loans are also available for up to $25,000 if you’re currently working with an SBA lender. The SBA is also providing financial reprieves to help struggling businesses.

Traditional Debt Relief Programs

As you might imagine, demand has been very high on the SBA programs, leaving a number of deserving businesses struggling while they wait their turn. Meanwhile, of course, bills are continuing to mount. A more expedient option could be to take advantage of the more traditional small business debt relief programs

Hiring an experienced negotiator to work with your lenders on your behalf can take a lot of the anxiety out of dealing with debt-related issues. Options include credit counseling, debt management, debt consolidation and debt settlement. The approach you should take will vary depending upon the severity of your situation. If the problem is caught early, credit counseling and/or debt consolidation can be particularly effective, without damaging your credit score at all.

In more severe cases, debt management and debt settlement can often get you interest rate and fee concessions from lenders. Debt settlement can even get a portion of the principal amount of your indebtedness forgiven when creditors cooperate. As you might expect, along with those concessions will come notifications to credit reporting bureaus, which could have an adverse effect on your scores. However, once the programs are complete, you can begin rebuilding with a pretty clean slate.  

You Do Have Options

These have indeed been exceptionally trying times and frankly, we’re likely to be in the woods with this virus thing for quite a bit longer. However, there is good news in the midst of all of this turmoil. 

You do have options when it comes to dealing with the debts this pandemic has imposed. Yes, some are more desirable than others. Still, they all have the potential to ease the burden of your indebtedness, while helping you stay in business until the “new normal” establishes itself.