The COVID Relief Act – Helping Buyers and Sellers Understand Their Options

The COVID Relief Act – Helping Buyers and Sellers Understand Their Options

In our previous article, “What You Need to Know about The COVID Relief Act in 2021,” we explored some of Steve Denny’s key thoughts from his webinar “COVID 19 Relief Act Update Special Addition.” The webinar can be accessed through this link.

During this event, Denny looked at truly unprecedented government lending and relief response to the pandemic. In this article, we’ll take a look at employee retention tax credit, the SBA Debt Relief Program and more. Through these programs and loans, the government is providing new tools to businesses and business owners. By understanding what options are available, you can act as a key source of useful and actionable information for your clients.

Not too surprisingly, there have been substantive changes many aspects of the government’s lending and relief response. The employee retention tax credit, for example, was $5,000 per employee for the entire year in 2020; however, for 2021, this was increased to up to $7,000 per employee for Q1 and up to $7,000 per employee for Q2.

Government relief loans have changed in 2021 as well. New SBA 7 (a), 504, Express and Microloans are limited to 1 loan per borrower, and all loan guarantees fees are suspended. Additionally, these loans feature a 90% guarantee to lenders, expanded from 7 years to 8 years with repayment terms up to 10 years. Quite importantly, the first six-monthly payments and interest are made by the SBA, which, of course, should be of great interest to your clients. It is also important to note that some borrowers may be eligible to receive an additional 5 months payments with interest. Denny pointed out that there are special loan provisions for refinancing, job creation, and retention. Lenders are also permitted to provide full payment deferment relief for up to 1 year. In short, the options now available for businesses are rather impressive and worth exploring.

Regarding the impressive level of government help now available to businesses, Denny stated, “I would encourage you as a professional in this marketplace to sit down and do the math with buyers. It’s astounding what’s available to them. And for sellers, it is a great opportunity for them as well, because buyers may be much more amenable to using SBA financing…as the gap between commercial lending and SBA lending is not nearly what it used to be.”

These are unique times. The amount of government assistance is something that you should not only be aware of, but also actively informing buyers and sellers about whenever possible. It is worth noting that while there is a staggering level of help available, the process of how to go about getting this help can be complex.

New programs, new rules, and changing rules are part of this pandemic relief landscape. Become a trusted resource through which buyers and sellers can successfully understand their options. If you can achieve that goal, you’ll place yourself at the heart of these exciting times.