April 2, 2020
The SBA loans under the Payroll Protection Program of the CARES Act offer small businesses the cash infusion needed to survive the economic crisis the country is facing.
Applications for these PPP loans, which can be 100% forgivable, can be made starting tomorrow, April 3rd, from private lenders certified to make SBA loans. Information about these loans and even the application are available online.
However, problems with the lending process and even the loans themselves have developed.
A story in Politico today, “Banks warn of chaotic launch of small business lending program”, raises red flags:
Banks are warning that a $350 billion lending program for struggling small businesses won’t be ready when it launches Friday because the Trump administration has failed to provide them with the necessary guidelines and set requirements for the loans that are unworkable.
For several days the South Carolina Small Business Chamber of Commerce has been trying to find more details on the requirements for the PPP loans to be forgiven. We are concerned that small businesses taking out the loans could be surprised with unanticipated debt.
According to the Politico story the banks also have questions on this issue:
Another concern is that the administration has provided little information on how the critical loan forgiveness part of the program will work.
The Small Business Chamber is also getting calls saying that the bank or credit union used by the small business is an SBA lender but will not be making PPP loans.
Small business owners needing to find another private lender in SC can use this list of SBA lenders provided by the SC SBA District Office. A word of caution. If you are not a customer of a private lender, it might not process a PPP loan for you. There is no SBA requirement that they do.
This PPP lending program was expected to offer a quick source of small business funding for payroll, rent, utilities and even mortgage interest.
Unfortunately, the process might take more time than hoped.
The good news is that while a loan application can be made tomorrow, the small business owner might have more time to have all questions answered prior to the loan being approved.
So, get the applications in. Remember there is a cap on how much funding is available for the nationwide loan program.
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