On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act) (P.L. 116-260) was signed into law.

The 7(a) Lenders modifications included temporary higher guaranty percentages and fee reductions on eligible 7(a) loans and an increase in the maximum SBA Express loan amount.


The new stimulus loan program is now available to acquire an existing wash, renovation, or ground-up construction. SBA will waive the guaranty fee (approximately 3.5 percent of the loan amount) if the loan closes by September 30, 2021. To receive the six months free payments (cap of $9,000) the loan must fully fund by September 30, 2021. Stimulus programs can be modified from time to time so be sure to check with your lender to confirm there have not been any changes.

If you purchase an existing car wash, it will close and fully fund on the same day. If you obtain a renovation or ground-up loan, the loan will not fully fund until the city accepts the respective renovation or ground-up construction. The critical requirement is the loan must “fully fund.” To avoid unpleasant surprises, make sure you comply with the above conditions.

The following provides a brief description of the stimulus benefits available to the car wash industry. Review and take advantage of these benefits if they apply to you.

Guaranty Fee

Subject to the availability of funds, beginning December 27, 2020, through September 30, 2021, the SBA Guaranty Fee (Upfront Fee) is reduced to zero. The Lender’s Annual Service Fee (SBA On-Going Guaranty Fee) will also be reduced to zero. Waiving the SBA Guaranty Fee is essentially the same as a life insurance company giving you a free single-premium term policy.

Six Months Free Payments

Contrary to the six free monthly payments in the first stimulus program, more conditions apply to the new program. The max amount of each free payment is $9,000. The first three stimulus payments are guaranteed. The following three are paid, assuming the remaining allocated funds are available to make the payments. Congress drafted the stimulus legislation to complete six months of free payments, but one should be aware these limitations exist.

Loan Guaranty of 90 Percent

Effective from December 27, 2020, through September 30, 2021, the SBA guaranty percentage increased to 90 percent. The 90 percent guaranty loan amount cannot exceed $4,166,666. On October 1, 2021, the guaranty percentages will automatically revert to previous levels. This 90 percent guaranty is a temporary SBA program created to encourage banks to make loans now.

PPP Program

This PPP program is similar to last year’s, but there have been changes. You must have experienced a revenue reduction of 25 percent or more for at least one quarter in 2020 relative to 2019. Also, the SBA must approve your application compared to the first round when they provided immediate approval. Legislation passed explicitly stating that PPP loans will not be taxable to the small business borrowers making it possible to deduct their payroll expense. The PPP program remains an excellent benefit for car wash operators to consider.

Lenders are not permitted to cancel any 7(a) loan that was approved but not disbursed before December 27, 2020, just for the sole purpose of re-submitting the loan to qualify for the temporary fee relief provided in the Economic Aid Act.


To say the pandemic has created pressure on our economy and lifestyle would be an understatement. The good news is that the stimulus programs, designed to address the country’s financial problems, offer once-in-a-lifetime opportunities that benefit short- and long-term car wash business plans. Now is the time to become very familiar with the programs that work best for you and take advantage of these benefits before they expire on September 30, 2021. It is comforting to know the car wash industry has continued to thrive even during these challenging times.

Hershel Pierce was a co-founder of Pavillion Bank in 1982 and is the founder of SBA-Capital, a car wash financing expert. You can contact him at (214) 726-9000 or pierce.pavbank@gmail.com. More car wash financing info and case studies are available at https://sba-capital.com/blog.