relief for small businesses

economic aid act

sba payment subsidies

SBA Adjustment Plan - Reduction in Debt Relief Benefits

In Section 325 of the Economic Aid Act, Congress appropriated $3.5 billion to carry out extended CARES Act Section 1112 payment subsidies.

You likely received a letter from SBA dated January 27, 2021, detailing the additional debt relief benefits that had been authorized by Congress based on the approval date of your SBA loan.

SBA has since determined that the funds appropriated by Congress will be insufficient to make all payments for the periods previously authorized.  Consequently, SBA developed an Adjustment Plan to proportionately reduce the number of months of payment subsidies provided for each specific category of loans.

Please note:  if your SBA loan was approved prior to March 27, 2020 and your Second Round of Section 1112 payments began in February 2021, ACH debit transactions will resume on April 1, 2021.*

*If your business falls into one of the “underserved” industries based on the NAICS code, according to SBA records, your loan may be eligible to receive three additional Second Round Section 1112 payments that will begin April 1, 2021.

The terms and eligibility are case-specific, so please refer to SBA Procedural Notice 5000-20095 for more details, or contact any member of our team.  For ease of reference, please refer to a flow chart  Guide to Section 1112 Payments covering the changes in SBA’s Adjustment Plan.

What are Section 1112 Payments?

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Relief provided in the Economic Aid Act is not a loan or deferment – the payments are simply made by SBA on behalf of the borrower. Payments will also not be treated as taxable income for federal income tax purposes.  State tax implications may apply – always check with your tax advisor.


FEBRUARY 1, 2021 - SEPTEMBER 30, 2021

New borrowers approved 2/1/21 – 9/30/21 (subject to availability) will receive three months of payment subsidies (principal, interest and fees), capped at $9,000 per loan per month, beginning with the first payment due after the loan has been funded by a debenture guaranteed by SBA and is in regular servicing status.

In addition, until September 30, 2021 (subject to availability), SBA is eliminating the following fees:

  • 0.5% Third Party Lender Participation fee, and
  • 1.5% CDC Processing Fee

See SBA Procedural Notice 5000-20095 for more details.

Combined, these two measures will result in significant savings for borrowers looking to buy, build or refinance.



  • 6 months of First Round 1112 Payments covering full amount of principal/interest/fees (per the CARES Act passage in March 2020)
  •  2 months of Second Round 1112 Payments starting capped at $9,000 per loan per month – this 2-month period for the Second Round Section 1112 Payments does not begin until the first month after SBA has completed the First Round Section 1112 Payments.
  • Additional 3 months (immediately after 2 months described above) of payment subsidies will be provided for loans of industries that Congress designated as hard hit by the pandemic capped at $9,000 per loan per month. These targeted loans are assigned one following NAICS codes beginning with: 61, 71, 72, 213, 315, 448, 451, 481, 485, 487, 511, 512, 515, 532, or 812.
MARCH 27, 2020 - SEPTEMBER 27, 2020

Loans Fully Funded (fully disbursed) on or before September 27, 2020

  • 6 months of First Round 1112 Payments covering full amount of principal/interest/fees (per the CARES Act passage in March 2020).

Loans Fully Funded (fully disbursed) on or after September 28, 2020

  • 3 months of First Round 1112 Payments covering full amount of principal/interest/fees
SEPTEMBER 28, 2020 - JANUARY 31, 2020

Not eligible for payment subsidies

  • The congressional intent of Section 1112 payment subsidies is to provide relief to existing borrowers in place at the onset of the pandemic and to stimulate new loans that would not otherwise occur because of the pandemic.


  • Loans approved during this time period were approved in a window where there was no expectation of COVID-19 relief.

As with any regulations, case-specific rules and guidelines may apply.

Please contact us if you have any questions about your eligibility.

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