Jennifer Condron’s BulletProof Productions LLC got a $350,000 loan backed by the U.S. Small Business Administration in 2019, before the COVID-19 pandemic shut down entertainment venues and dried up their revenue. Under these extraordinary circumstances, the agency issued guidance in early March 2020 that encouraged lenders participating in its 7(a) program to allow deferred payments for six months and beyond, Bloomberg Law reported. But the latest extension of that policy, one of the last remaining forms of pandemic relief for businesses, expires at the end of September. Borrowers without the means to pay back the loans because of the pandemic, such as those that relied on foot traffic from people working in offices, will have few options to stop lenders from demanding payments, small-business attorneys say. Condron’s bank has already tried taking her to court, which in turn caused her to be rejected by a federal pandemic-relief fund for shuttered entertainment venues. She has already exhausted both a Paycheck Protection Program (PPP) loan and a Economic Injury Disaster Loan (EIDL). Now, her hopes hinge on winning an appeal for the entertainment venue grant before she has to declare bankruptcy. More defaults and bankruptcies are likely unless the agency — or Congress — steps in. The SBA’s 7(a) program provides government-guaranteed loans for small businesses that otherwise can’t get loans from banks because of thin credit files or other risk factors. Before the pandemic, it was the agency’s most popular program. Since fiscal year 2008, it has approved about 730,000 loans worth more than $270 billion. Typically, an owner will put up valuable personal assets as collateral in the form of vehicles or real estate. All programs but EIDL have expired, and without an updated policy in place, “we are going to see some lenders moving to enforce these loans that are delinquent,” said Davis Senseman, attorney and founder of Minnesota-based small-business advocacy law firm Davis Law Office. Jason Milleisen, owner and operator of Distressed Loan Advisors, who consults for small businesses with defaulted SBA loans, said delinquencies and defaults will likely come in November or December.
