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NAGGL Endorses Legislation to Extend Section 1112 Payments
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On Thursday, September 24, Senators Coons (D-DE) and Cardin (D-MD), along with Congressman Delgado (D-NY), introduced in both the Senate and House a bill to extend Section 1112 payments. Please see the official press release, in which NAGGL was included as one of the trade associations providing an endorsement to the introduced legislation. 
 
NAGGL played an instrumental role in helping to work through the legislative text to extend Section 1112 payments, acting as a leading voice in calling for these payments to continue while significant funding still remains. These changes would extend both the number of payments made for borrowers, and the date by which new borrowers would be eligible to receive these payments. After taking into account payments already made or anticipated to be made in the months ahead, Congress has roughly estimated that only $8 billion of the $17 billion appropriated for Section 1112 payments will be utilized. NAGGL believes that the Congress should be doing everything it can to utilize the remaining funds already appropriated to continue providing this stabilizing support for borrowers with regular 7(a) loans, and NAGGL is grateful that this legislation would do just that.
 
NAGGL also has been raising the red flag for months as to the need to address a critical issue in the Section 1112 implementation by SBA. The Agency announced in guidance that a loan would have to be fully disbursed by September 27 in order to receive Section 1112 payments. However, statute made clear that the loan simply had to be “made,” or approved by SBA, by September 27 in order to receive these payments. This means that otherwise eligible loans that could not be fully disbursed by September 27, including loans made since March 27, did not receive badly needed payment relief. So, NAGGL has been calling on Congress for months to clarify this issue in statute. We are thrilled this would finally be addressed through this legislative text. 
 
Finally, NAGGL also has urged Congress to avoid taking any action that could jeopardize utilizing the remaining funding for Section 1112 payments, as the Senate GOP Targeted Relief Package could have done. NAGGL was the leading voice calling attention to this rescission of Section 1112 funding, which would simply have returned the remaining Section 1112 funds to Treasury, rather than using them to continue helping small business borrowers. Luckily, the bill in which this provision was included did not pass the Senate, but NAGGL helped to shed light on this legislative maneuver that would have taken small business recovery in the exact wrong direction. Please see the letter to Congress in which NAGGL was joined by many other small business advocacy groups to highlight this concern.
 
It remains unclear whether these stand-alone bills to extend Section 1112 payments will progress through the legislative process. But, please know that NAGGL is doing everything it can to shed much needed light on this critical provision of the CARES Act

 

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