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Started By
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re: SBA and PPP
Posted on 4/2/20 at 2:26 pm to CajunInFL
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.
6
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 2:46 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 7:00 pm to Hermit Crab
quote:
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.
First off, the increases it to 1%
Second of all. They can go frick themselves. It’s federally guaranteed and there sure as shite isn’t a lot of other guaranteed lending going on.
People will literally complain about anything.
Posted on 4/2/20 at 10:04 pm to Hermit Crab
quote:
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.
This is true. Also, if a business misreports information to us, we can be held liable in certain aspects to the feds. It’s not worth venturing out too far beyond our current customers whom we know and know well.
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