Several people have reached out to me about the SBA lending programs and how much time they are taking.
Here are a few things to think about:
Keep in mind that as of Monday we are only 10 days into this lending program – 6 days if you subtract the past two weekends.
Based on my research and having talked to several banks about what is going on, here are a few points to keep in mind when apply for any of the CARES ACT SBA funding opportunities.
1. This is the first time in American history that our country has dealt with something of this magnitude.
2. These loans are a three-step process 1) Loan approval 2) Loan acceptance by borrower 3) Loan funding.
3. The SBA did just a little over 60,000 loans in 2019, right now they have approved over 860,000 applications which is a 1433% increase in approved loans for the SBA in less then 10 days. Not bad for a government agency.
“The “PPP,” the Trump administration’s centerpiece program to help small businesses weather the economic effects of the coronavirus, has approved 860,000 applications for $210 billion of loans through 4,500 lenders — an accomplishment praised by many bankers.” (Credit to Kate Rogers, CNBC)
4. Once the loans are approved by the SBA they are funded by the bank and the bank is
reimbursed by SBA. At the moment the bottle neck is the SBA issuing a “clear to fund” to the bank. Another way of looking at this is the banks are waiting for a funding number, kind of like a PO number in-order to be reimbursed for the loan.
5. Some banks have moved to using their own funding forms rather then wait on the SBA. Which is helping to complete and speed up the process.
6. The banks have forgotten that its not their job to approve or deny the grants, that’s the job of the SBA. By holding up applications banks are adding unnecessary financial pressure to small business nationwide. We are in very unusual credit times and banks need to stop playing “GOD” with small business owners.
7. Check with your bank or whoever you chose to work with on your PPP loan. They are the ones that will have the most accurate answers pertaining to your application and where it stands in the process. Call them or Email them for updates.
8. Trust me on this – the banks are motivated to do these loans and get them funded because they are making money from each loan that gets funded. To them this is like a lenders dream come true – Motivated clients plus FREE government money equals more bottom-line profit in the 2nd quarter of 2020.
9. Help them to help you by staying calm, treat your banking contact with professionalism and kindness. The easiest to work with clients always get money first. If you’re a problem client there is a good chance your file will be moved to the bottom of the stack, (just a little insider secret).
In America, business owners share a love hate relationship with banks and the US Government. In this case we have to deal with both at the same time to get what we need to survive as business owners.
One more thing; if you applied for the SBA EIDL $10,000 loan / grant prior to March 31st you will need to reapply. They have also changed the pay to being $1,000 per employee and it’s taking 14+ days for them to respond to any applications. Patience is necessary during this process.
To your success,
Troy Fullwood
Editor- The Thriving Investor
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