Over the past few days, we’ve been on the phone with a number of clients. We imagine them sitting with a cellphone on one shoulder and an office phone on the other because many of them were running through their Small Business Administration’s loan application.
That may be a bit optimistic. To say that they were ‘“running through the process” would imply that the process was in motion. Like tens of thousands of small businesses across the country, diligent owners are slamming into a virtual wall in finishing their applications.
To be fair to the SBA, the situation is simply unprecedented. Two weeks ago, 3.3 million people applied for unemployment, smashing records. That mark lasted all of seven days when it was itself devoured by nearly 7 million losing their jobs to end the month of March. Many of those people worked for small and medium-sized companies that do qualify for a slice of the over $350 billion in loans and grants tucked into the $2 trillion CARES Act signed just a few weeks ago.
That logjam should see some movement over the next few weeks, however. As we rolled into the weekend, the federal government has tagged in a number of private companies to help banks process applications and claims. In addition, they’ve contracted three firms to help manage specific support and bailouts for companies in the travel and hospitality industries, including airlines like American and Delta.
These loans are also grants, and that’s key to understand. If businesses bring employees back onto the payroll, the loans to pay those employees won’t have to be paid back. There are many conditions and restrictions, but for many companies, it could be the difference between re-opening at full speed or struggling.
One of the most important factors in the SBA process has been prior relationships. Businesses who have a history of loans and up-to-date relationships with lenders have influenced just how quickly those applications are processed. That does tend to make the distribution of these funds inherently tilted toward larger companies, even if those companies still fit within the revenue and employee restrictions tied to the lines.
That makes it even more important the small businesses are aggressive in pursuing their fair share. Some of our clients spent hours on the phone with local banks or with the SBA, but after a few days, most have gotten their loans and grants processed. The distribution of these funds could still be a few weeks off, much like the promised $1,200 checks to individuals that are also a part of the stimulus package.
Right now, it’s vital that small businesses invest the time to process their loans. It’s also worth reaching out to your past lenders and also reaching out to your current banking partner to make sure all of your information is up-to-date and readily available.
Get your business info around and dig in. The SBA application is available here.