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Started By
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SBA and PPP
Posted on 4/2/20 at 2:04 pm
Posted on 4/2/20 at 2:04 pm
There's an application on the SBA website for this, however what I've read is that the bank will be the ones processing the loans. I have yet to find a bank that I can work with (currently using a Credit Union for my business that is not a part of the SBA program). Does anyone have info on this? I called wasn't able to speak to someone at the SBA, just a bunch of prompts and FAQ's that didn't help.
Thanks!
Thanks!
9
Posted on 4/2/20 at 2:10 pm to CajunInFL
The application on the website is for the EIDL loan. This is not part of the PPP program and no portion of it will be forgiven. You are correct that you need to go through a bank to apply for the PPP program loan. The link below will give you all the 7(a) eligible lenders. These will be the most prepared to help you apply for the loan.
LINK
LINK
Posted on 4/2/20 at 2:13 pm to CajunInFL
LINK
This is a standard / sample form for the PPP.
Banks are processing them, and may have their own form / seperate forms, but this should help you get started.
I would just start calling banks. If you are in South LA, Gulf Coast Bank and Trust is a big SBA lender.
This is a standard / sample form for the PPP.
Banks are processing them, and may have their own form / seperate forms, but this should help you get started.
I would just start calling banks. If you are in South LA, Gulf Coast Bank and Trust is a big SBA lender.
Posted on 4/2/20 at 2:18 pm to Spock
quote:
The application on the website is for the EIDL loan. This is not part of the PPP program and no portion of it will be forgiven
Not entirely true. There’s a $10k grant portion of the EIDL.
Posted on 4/2/20 at 2:18 pm to LSUFanHouston
Thanks, I filled out that form last night. Just need to get it to the right hands for processing.
Woo!
Woo!
Posted on 4/2/20 at 2:20 pm to cmlsu
quote:
There’s a $10k grant portion of the EIDL.
Just curious as I am not a part of any of these loans... but can a business (or independent contractor) apply for the $10k grant without with EIDL?
I can see tons of manipulation if that’s the case.
Posted on 4/2/20 at 2:26 pm to CajunInFL
There are some problems with the program that is going to keep banks from wanting to deal with this for someone who isn’t already a customer.
Banks are going to get applications from just about every single customer they already have and been swamped trying to get their clients applications through the process, approved, loan docs drawn up, and closed.
The interest rate on this is going to be 0.5%. That means that a company with 20 employees making an average of $50k is going to be able to get a loan of over $200,000, the interest on that loan over 6 months before it gets forgiven will only amount to $500. Banks are going to be losing money for each one of these they do so there is no incentive for them to reach out beyond their current customers unless they think they can bring in a prospect by helping them out.
Banks are going to get applications from just about every single customer they already have and been swamped trying to get their clients applications through the process, approved, loan docs drawn up, and closed.
The interest rate on this is going to be 0.5%. That means that a company with 20 employees making an average of $50k is going to be able to get a loan of over $200,000, the interest on that loan over 6 months before it gets forgiven will only amount to $500. Banks are going to be losing money for each one of these they do so there is no incentive for them to reach out beyond their current customers unless they think they can bring in a prospect by helping them out.
Posted on 4/2/20 at 2:30 pm to Hermit Crab
Yeah, that's a good point and frustrating to boot. I just contacted Gulf Coast and hopefully they'll be able to help. At least someone answered the phone when I called, that's a huge plus!
Posted on 4/2/20 at 2:31 pm to Hermit Crab
Not to mention CIP issues for non-clients applying to a Bank.
It is a mess. We received 500 applications in an hour.
It is a mess. We received 500 applications in an hour.
Posted on 4/2/20 at 2:34 pm to catfish 62
Yes, the main advantage existing customers have is that the bank likely has a good portion of the information it needs to close the loan (entity docs, certificate or good standing, beneficial ownership form). Those things can be a hassle to collect for new customers
Posted on 4/2/20 at 2:35 pm to CajunInFL
Community Bank in MS is a big SBA lender.
Posted on 4/2/20 at 2:46 pm to Hermit Crab
The banks aren't going to make any money from the interest on these loans. however, they can charge points up front on the loans i believe it's up to 4 or 5%. that's where they will make their money. 5% of $200k is $10k for taking absolutely no risk because the loans are guaranteed by the SBA
Posted on 4/2/20 at 2:52 pm to Hermit Crab
quote:
The interest rate on this is going to be 0.5%
They aren't going to make anything on the interest rate as most of this is expected to be forgiven.
They are getting a fee... 5% on loans under 350K, 3% on loans 350K to 2 million, and 1% on loans more than 2 million.
That would be $17,500 on a $350K loan with I assume the payoff forgiveness payment coming from Treasury.
Is that worth it for a bank? What about $1,750 on a $35K loan?
Posted on 4/2/20 at 3:02 pm to LSUFanHouston
Hadn’t seen that, but just looked it up. It’s a reimbursement from the SBA for processing fees and not upfront fees paid by the customer. Will banks need to submit processing fees or is it just a flat amount?
Posted on 4/2/20 at 3:10 pm to Jerrysworld
5% sounds like a lot of money for no risk, but we do have overhead to pay you know. Plus there will be a lot of calories spent on doing this both on the front end and the back end with forgiveness.
The only ones that will kill it financially are the fintech guys who will have the entire program from soup to nuts automated.
The only ones that will kill it financially are the fintech guys who will have the entire program from soup to nuts automated.
Posted on 4/2/20 at 3:11 pm to Hermit Crab
I didn't see anything about reimbursement. Seemed like it was just a fee.
I'm sure the bank can justify the reimbursement if they need to
I'm sure the bank can justify the reimbursement if they need to
Posted on 4/2/20 at 3:12 pm to Im4datigers
quote:
5% sounds like a lot of money for no risk, but we do have overhead to pay you know. Plus there will be a lot of calories spent on doing this both on the front end and the back end with forgiveness.
Yeah, that's what I was curious about.
Posted on 4/2/20 at 4:26 pm to LSUFanHouston
Problem for banks is three folds based on one determination.
Determination: what is considered wages (the loan amount)and what document does the bank use to verify wages? If this point does not get settle then:
1. Banks are worried if they get the loan amount wrong then SBA won’t honor 100% guarantee. These loans are not collateralized or personally guaranteed by borrower. No SBA promise and a default the the bank takes the 100% hit to earnings and capital.
2. Banks are worried if they get the loan amount wrong the SBA will not pay the fee. No fee means the bank is doing something at a loss. That is a bad business model.
3. Banks are worried if they get the loan amount wrong the SBA won’t forgive any amount of the loan as advertised. Banks will get blamed and fake reputation hit since they determine the loan amount without guidance and they have to computer and validate the terms of the forgiveness.
Determination: what is considered wages (the loan amount)and what document does the bank use to verify wages? If this point does not get settle then:
1. Banks are worried if they get the loan amount wrong then SBA won’t honor 100% guarantee. These loans are not collateralized or personally guaranteed by borrower. No SBA promise and a default the the bank takes the 100% hit to earnings and capital.
2. Banks are worried if they get the loan amount wrong the SBA will not pay the fee. No fee means the bank is doing something at a loss. That is a bad business model.
3. Banks are worried if they get the loan amount wrong the SBA won’t forgive any amount of the loan as advertised. Banks will get blamed and fake reputation hit since they determine the loan amount without guidance and they have to computer and validate the terms of the forgiveness.
Posted on 4/2/20 at 4:43 pm to Hermit Crab
quote:
it just a flat amount?
Percentage based on the loan.
At least what I saw from my professional organization that sent a email out to us about the program..
quote:
the SBA guarantees 100% of the outstanding balance, and that guarantee is backed by the full faith and credit of the United States.
The SBA waives all SBA guaranty fees, including the upfront and annual servicing fees. Processing fees will be based on the balance of the financing outstanding at the time of final disbursement:
Loans $350,000 and under: 5.00%
Loans greater than $350,000 to $2 million: 3.00%
Loans greater than $2 million: 1.00%
Lenders may not collect any fees from the applicant
PPP loans can be sold in the secondary market. The SBA will not collect any fee for any guarantee sold into the secondary market.
Posted on 4/2/20 at 4:55 pm to Puffoluffagus
Wife works for a small business who don't know what they are doing. Need to talk to them about getting this in place
This post was edited on 4/2/20 at 4:55 pm
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