Clock’s Ticking on Small Business Coronavirus Relief

Businesses are confused. Bankers are confused. It’s going to take some time before the Small Business Administration (SBA) can guarantee what it can do for struggling Mid-South companies.

**EDITOR’S NOTE** – On April 13, the SBA released more specifics on its Economic Injury Disaster Loan, or EIDL. The loan is an advance based on the number of a small business’s pre-disaster employees. The advance will be $1,000 per employee up to a maximum of $10,000.  — Andy

Amy Sullivan decided she better launch a preemptive strike.

As the owner of my advertising agency partner A.D. Ventures Media Solutions, Sullivan wanted to make sure the salaries of her diminutive staff of six would be safe during the pandemic. “Payroll protection is the only loan I sought after,” said Sullivan. “It was the only loan I heard that I would be able to get through your local FDIC-insured bank.”

She contacted the bank that holds her business accounts. It’s FDIC-insured, but not yet authorized by the SBA to write the agency’s payroll protection loan program. “They were hopeful that they were going to be able to participate, but had no solid anything to tell me,” she said.

To this point, the SBA has had no solid anything to tell anyone.

“They’re changing the rules as we go along,” said McCall Wilson, president and CEO of Bank of Fayette County, a 115-year-old community bank that has applied to be a SBA-authorized lender. “We sent in a form to get approved, then a new form came out, and they said, ‘No, you have the old form, that’s fine.’ Then they told us we had to use the new form. The left hand doesn’t know what the right hand is doing.”

The most important thing I can recommend as of this writing: if you’re a small business in turmoil because of the pandemic, you should approach lenders whom the SBA has already authorized to write SBA-backed payroll protection, forgivable loans and bridge loans. If your current bank is not authorized, click on the SBA’s local assistance directory and drill down to a local financial institution who is authorized to help you.

However, you should know that even some of the SBA-authorized institutions are choosing to ride the government ebb-and-flow rather than to talk specifics. First Horizon, formerly First Tennessee, is Tennessee’s largest-reaching business and consumer banker and a SBA-authorized lender. Its corporate communications officer Silvia Alvarez said she thought it would be best to put us in contact with the bank’s Director of Government Guaranteed Lending Adrienne Sipe. While I awaited Sipe’s contact, Alvarez directed us to a page on the First Horizon website that read:

“First Horizon is committed to doing everything we can to get Paycheck Protection Program loans to the businesses that need them. Following our successful pilot over the weekend, improved functioning of the SBA systems, and more clarity around the rules governing the program, our bankers have expanded the pilot and are now working hand-in-hand to help more customers submit their loan applications. We are finalizing an automated application process which will be live in the next 24 hours to help further expedite loan applications. In the meantime, we recommend that you begin gathering the necessary documentation to successfully complete a PPP application. Information to get you started can be found here.”

“This particular topic is an ever-changing process with updates daily,” said Diedre Barret, senior vice president and chief retail officer of Guaranty Bank, a SBA-authorized lender. “I would say that we are all over this and making sure our business customers are getting help and taking advantage of the opportunity.”

“Our fear is (the SBA) will want us to give you two-and-a-half times your company payroll,” worried Wilson. “They’re not personally guaranteeing it. I don’t know when you’re going to pay that back. How do I collect the money? (The interest) was originally going to be four percent. Then they cut it to half of a percent. It costs me a quarter percent to fund a loan. Again, this is changing everyday.”

Until the SBA can guarantee its funding process, I’m continuing to guide my Wise Choices to the SBA’s ever-evolving online clearinghouse for information about the programs it’s preparing for its authorized lenders. You’ll find it inside this #WiseAdvice blog article I recently published. The direct link is www.sba.gov/coronavirus.

“I tell my agents to give them that link,” Wilson said. “If they need it now, go ahead and get in the queue at another bank. We tell them to start with those who are SBA lenders first. If their current loan is with me, I can get them an extension or a deferment. If it’s government money they want, I can’t guarantee we can do that until we are authorized and approved by SBA to do that.”

Until Sullivan’s bank gets authorized, she will shop other banks who are. “They’re still waiting on getting approval and getting all of their information together,” she said.

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