04/05/2020
As you would imagine, we are receiving an overwhelming number of requests for the SBA Paycheck Protection Program for small businesses affected by COVID-19.
To be clear, we do not have a financial interest in who you obtain SBA PPP funds through. We are simply offering sound guidance.
Until now, the speed and efficiency of processing appears to be affected by 2 primary factors:
1. You already have a loan with the SBA partner bank that your application goes to. This makes sense; if you already owe your bank money on an existing business or personal loan they have a greater incentive to make sure you get funds to keep servicing those loans.
2. The bank's ability to handle the processing. Do they have the manpower and FINTECH (financial technology) SBA-specific infrastructure to process your application and deposit funds into your business account?
If you do have a loan balance with your bank (any type of loan balance: mortgage, car, business loan, personal loan, etc.) we suggest you apply with them immediately, if you haven't already. So far the only definitive pattern I've seen is that debtors go to the front of the line (surprise, surprise).
I've been speaking on a daily basis with 2 of our biggest SBA facilitators. They're consistently in the top 4 nationwide every year, and have more access to SBA platforms, SBA loan funding technology and experience than 99.9% of financial institutions, and even they are delaying the acceptance of applications until they are 100% certain that they are prepared to transact (approve loans and deposit money into your business bank account!). I trust their guidance completely, and will keep you posted. They are approaching this carefully and will need a few more days.
If you already have a SBA loan pre-approval through us they will get to work on your PPP loan as soon as they're ready, unless you tell us otherwise. If you can make progress through your bank or other source, terrific! Once this is under control, we will move forward with your SBA business loan application unless you instruct us otherwise.
From what I've observed, most other entities are just collecting names and hoping they can deliver when the PPP is in full stride. One of our largest Non-SBA funding partners put up a link on their website for clients to 'apply', and I know with certainty that they don't have an infrastructure in place to get this type of funding handled.
It's for this reason that I believe that pulling the SBA into this relief package was a stupid move. It simply added another layer to getting businesses the capital they need to stay afloat. The Treasury and Central Bank could have worked together to get private sector banks and lenders the capital to lend to business owners, with the SAME benefits of the PPP!
Banks that can fund are rightfully worried about getting this wrong. There will be fraud, there will be losses; and although the government is standing behind them, these banks WILL lose money and time. Then our taxes will bail them out...again.
We should all be concerned. Things that hurt our banking system will eventually affect all of us - We all saw the impact of a weakened banking system in 2008.
We work with dozens of funding sources (we have access to over 1,000), and I can assure you that not ONE bank is thrilled about lending money at 0.5% to 1% interest. The notion that government 'has their back' sounds goo, but it's not that simple. I tell you this so that you will be as organized as possible and approach this just as you would a typical loan application, and that you stay flexible.
Large banks like PNC, Citigroup and Wells Fargo (among other large banks) are still reviewing the program rules (as of Friday). I was actually glad to see that they're being careful. JPMorgan Chase began accepting applications on Friday. Let's hope they're ready to transact ASAP.
So far Bank of America seems heroic in their response, but you may have heard about the (many) applicants who were turned away for not having a Bank of America loan and/or account. Even customers who have multiple personal and business checking and savings accounts have been turned away. Again, customer-debtors get dibs.
I reviewed about 2 dozen lenders' Online Applications and can state with certainty that if you do not receive a SBA-connected link, you are just being placed on a long list that will hopefully be handled when they're really ready.
In the meantime, we are still open for business. Many of our clients are not waiting for the SBA banks and the government. We're still funding American businesses so let us know if we can be of service.
