After threatening last week to veto the bipartisan COVID-19 relief package, President Donald Trump signed the bill Sunday evening, paving the way for $600 economic aid payments and other provisions affecting banking and lending.

The new legislation revives the Paycheck Protection Program, provides funding to minority depository institutions (MDIs) and CDFIs and extends the eviction moratorium. Other provisions in the new legislation will also affect banks, credit unions and CDFIs.

Not long after the start of the pandemic, financial regulators let lenders modify loans for customers affected by the pandemic without having to account for them as troubled-debt restructuring. This allowed banks and credit unions to assist customers without worrying about accounting implications or consequences with bank examiners.

This tool will continue into 2021, as the new legislation will let lenders modify loans for customer affected by the pandemic without having to classify them as TDR. This provision will continue until the earliest of 60 days after the national emergency ends or Jan. 1, 2022.

Banks that were scheduled to start using the new current expected credit loss accounting method in 2020 will be able to delay adoption until Jan. 1, 2022. Some banks decided to adopt CECL in 2020 even though the CARES Act provided an initial extension until the end of this year.

While the PPP dominated U.S. Small Business Administration lending in 2020, the SBA’s traditional loan programs continued to provide funding to small businesses during the pandemic. The traditional programs will see changes – some temporary and others permanent.

For the first nine months of 2021, lenders will be able to issue loans through the SBA’s largest traditional program – the 7(a) – with 90 percent of the loan amount guaranteed. This guarantee is an increase from 85 percent for 7(a) loans up to $150,000 and 75 percent for loans over $150,000. Lenders participating in the Community Advantage program for underserved markets will also have loans guaranteed at 90 percent until Oct. 1, 2021.

The amount eligible for Express Loans will temporarily increase to $1 million from Jan. 1 through Oct. 1. A new maximum loan amount of $500,000 will then kick in on Oct. 1, an increase over the current $350,000 maximum.

For Express Loans of $350,000 or less, the government guarantee is increased to 75 percent of the loan, while loans greater than $350,000 will retain the 50 percent guarantee. All loans will have a 50 percent guarantee beginning Oct. 1.

The new legislation also gives the SBA the authority through Sept. 30, 2023, to establish a 504 Express Loan Program for certain 504 lenders to expedite 504 loans of less than $500,000. And the 504 refinancing rules are changed to facilitate refinancing between 504 and 7(a) programs.

The microloan program for capital and technical assistance will also have some changes for businesses affected by the pandemic, including:

• Temporarily increasing the amount of time that borrowers can repay their loans from six to eight years.
• Temporarily increasing the outstanding aggregate amount each intermediary may borrow from $6 million to $10 million to expand their capacity to deploy more capital to small businesses.
• Allowing intermediaries to access more technical assistance funding if they serve rural areas.
• Temporarily waiving the limitations for the technical assistance grants and the 50 percent limitation on pre-loan technical assistance.
• Providing $50 million in additional funding for Microloan Technical Assistance funding for lenders and $7 million to leverage about $64 million more in microloans to businesses.