Back in April of last year (2020), SBA began making payments covering principal, interest, and fees for certain types of loans. This was under Section 1112 of the CARES act.
Payments to qualifying loans have either already ended, or are scheduled to end in the near future. Borrowers are, or shortly will be, responsible for their own payments.
There are many variables involved in which loans were eligible and which weren’t. Since this isn’t an ongoing situation, I’m not going back to revisit them; those variables are no longer relevant.
Instead, let’s look at the questions you need to ask as SBA CARES Act payments come to an end.
- How are the businesses impacted by this change doing overall?
- How are you, the Lender, handling deferral requests?
- Are your Borrowers prepared to make those payments?
- Are you starting to see your loan delinquencies increase?
- Is it time to schedule an independent 3rd party review of those loans showing distress?
These are all questions only you, the Lender, can answer. And they’ll require research, outreach to the Borrowers impacted, and a whole lot of care and attention.
This is what we here at LRM Lender Consultants do: we help you develop and use the tools and processes you need to work with your Lenders on these types of issues.
So if you’re looking at these questions and wondering where to start and how to find the resources, why not start with scheduling a free consultation to see how we can help?
