SBA & Treasury Policy Alerts

What Happened

The U.S. Department of the Treasury's Bureau of the Fiscal Service has resumed active collection on COVID EIDL debts that were previously referred through the Cross-Servicing program.

Who Is Affected

Borrowers whose COVID EIDL loans were referred to Treasury for collection (Stage 5 in the EIDL lifecycle). This includes borrowers who may have experienced a pause in collection activity and assumed their case was inactive.

What You Should Do

• Review any new correspondence from Treasury carefully — deadlines may be included.
• Do not ignore offset notices — tax refund and wage garnishment actions may resume.
• Contact SmallBiz Recon™ for a case review if you are in or approaching Treasury referral status.

SmallBiz Recon™ Recommendation

If you have received new Treasury letters, book an Advanced Strategy Session immediately. Early intervention before offset actions begin is significantly more effective than responding after the fact.

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What Changed

The SBA has updated its internal procedures for reviewing hardship requests from COVID EIDL borrowers. The changes include streamlined documentation requirements and broader eligibility criteria for payment modifications.

Who Is Affected

Borrowers currently making payments (Stage 2) or in delinquency (Stage 3) who are experiencing financial difficulty.

Key Changes

• Simplified financial documentation package
• Expanded definition of qualifying hardship
• Faster processing timelines for hardship reviews

SmallBiz Recon™ Recommendation

If you previously had a hardship request denied, the updated criteria may change your eligibility. Contact us for a free reassessment.

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Background

The SBA requires current property appraisals for subordination requests involving real estate collateral on COVID EIDL loans. Appraisals must be dated within 12 months of the request submission.

Impact

Borrowers seeking to refinance, sell, or restructure property securing their EIDL loan must obtain a new appraisal if their existing one is more than 12 months old.

SmallBiz Recon™ Recommendation

Before spending money on a new appraisal, consult with us to ensure your subordination package is complete and your request has a strong chance of approval. We review the full application before submission.

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Overview

The Treasury Offset Program (TOP) allows the federal government to intercept federal payments — including tax refunds, Social Security benefits, and federal wages — to satisfy delinquent federal debts.

Current Status

The TOP is now fully active for COVID EIDL delinquencies that have been referred to Treasury. Borrowers who have not responded to prior SBA correspondence may be subject to immediate offset upon their next federal payment.

What To Watch For

• IRS offset notice (BFS-1) in your mail
• Reduced or zero federal tax refund
• Notice from Social Security Administration if receiving benefits

SmallBiz Recon™ Recommendation

If you expect a federal tax refund and have a delinquent COVID EIDL, act before you file. Contact us immediately for an emergency case review.

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What Was Clarified

SBA loan servicing centers have updated their internal processing checklists for collateral release requests. The primary change involves uniform documentation standards across all servicing center locations.

Key Documentation Requirements

• Updated UCC lien searches (within 60 days)
• Current balance confirmation letter
• Borrower written request explaining basis for release
• Supporting financial statements if requesting partial release

Why This Matters

Previously, documentation standards varied slightly by servicing center. This clarification standardizes the process, meaning packages that were accepted at one center may need additional documentation at another.

SmallBiz Recon™ Recommendation

Use our Collateral Release Toolkit to ensure your package meets the updated uniform standards before submission.

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Status

This is a legislative proposal only — it has NOT been enacted into law. SmallBiz Recon™ is monitoring this development closely.

What Is Being Proposed

• Partial principal forgiveness for loans under $150,000
• Extended deferment periods for businesses still recovering
• Streamlined hardship review for qualifying borrowers

What This Means Right Now

Nothing has changed yet. Borrowers should continue making payments and meeting their existing SBA obligations. Do not stop payments based on this proposal.

SmallBiz Recon™ Recommendation

We will publish an update immediately if this proposal advances or is enacted. Sign up for our Policy Alert emails to get notified first.

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