Small Business Administration Paycheck Protection Program Advances After a difficult start.
When the federally guaranteed low interest loans to help small businesses were launched last Friday, businesses struggled to figure out how to apply and banks struggled to get instructions from the government. government.
To date, banks forwarded approved loan applications to the SBA. But many businesses weren’t sure when their loan checks would arrive – or if they would arrive at all.
After a long and anxious Friday spent trying to reach the SBA, La Salle State Bank in central Illinois managed to log into the federal agency’s loan submission portal on Friday night.
Since then, the bank has forwarded 41 approved loan applications, according to senior loan officer Chris Duncan, and the SBA has assigned them all loan numbers.
“Basically we’re told it’s the SBA approval, the de facto loan approval,” Duncan said.
But the bank can’t start handing out checks until it gets more advice from the SBA on loan deal details. he should use.
“The loan documentation, the promissory note you may need to sign, what language does it have to contain,” Duncan said. “Until we have this, we cannot produce the agreement that the bank and the borrower have to sign so that we can return their money to them.”
The bank has another 15-20 loan requests “on the bridge,” Duncan said, with more requests every day and enough cash to fund 50 loans.
“Depending on the number and size of future loan applications – we received four more this morning that I haven’t had a chance to review – we might have a liquidity problem during the week,” Duncan said. “This is where the Federal Reserve Bank program will be crucial in keeping the train on track. The Treasury will need to put this in place quickly so that banks do not have to liquidate investments at a loss in order to finance PPP loans. ”
Some small business owners are impatient with the delays. A major bank on Friday approved a request from New York cocktail bar owner Ashwin Deshmukh. But he doesn’t expect to see the money until next week.
This uncertainty leads him to wonder if he should turn to other financial institutions in the meantime.
“We just need to set a deadline internally by which we need to hear from our existing financial institution, or we need to start buying more nimble and smaller options,” Deshmukh said.
Other companies haven’t even gone that far in the process.
John Resnick, owner of Proforma, a Boston-based marketing firm, had not heard from his credit union on Friday whether he could even apply for a loan.
“We have been defeated,” he said.
Resnick finally got news late Monday night. Her credit union sent an email saying she was accepting loan applications and asking for more documentation.
“Now we’re back in the waiting game,” Resnick said. “We’re back in the dark, but I’m sure it will work out on its own. ”