SBA Window for Very Small Businesses Expires Soon
The 14-day window for very small businesses to apply under a special period in the PPP loan process will end next week. Meanwhile, other improvements to SBA loans can also benefit businesses looking to borrow, say those in the lending field.
On the last lap of the Paycheque Protection Program (PPP), the federal government opened a 14-day period on February 24 during which only businesses with fewer than 20 employees, nonprofits and sole proprietorships can apply for relief through the program.
The window for these companies to apply closes at 5 p.m. on March 9, according to the Small Business Administration (SBA). During this time, lenders make these small businesses a priority.
The SBA has hosted webinars to help companies navigate the offer, some taking place this week and next week, before the window expires. These webinars are: For Hispanic Small Business Owners, at 3 p.m. March 5 (Click here to join); for veterans, independent business owners, 2 p.m. on March 6 (Click here to join); and for LGBTQ entrepreneurs, young entrepreneurs and restaurateurs at 3 p.m. on March 8 (Click here to join).
All PPP-eligible companies can still apply until the second round of the PPP before it expires, scheduled for March 31. Additional program changes to make access to PPP loans fairer were also announced at the end of February.
“There has certainly been a great response and we have already gained approval from a substantial number of companies,” Janis Shields, director of media relations at Self-Help Credit Union, said in an email. about the last 14 day offer.
The Durham-based credit union lends to many of these businesses that the 14-day PPP period aims to serve.
“I think this has been a great opportunity for these businesses. About 95% of black-owned businesses and around 91% of Latin American businesses are businesses that have less than 20 employees and that’s the main focus of this. change, ”Shields said.
Overall, in the last P3 cycle, the credit union has “obtained approval for approximately 400 loans to date; that’s about $ 30 million in funds that will help women and businesses of color, and for businesses that have employees, it’s going to help maintain about 3,000 jobs, ”she said.
In Wilmington, the credit union received SBA approval for four second-draw loans totaling $ 122,000, she said.
Live Oak Bank, based in Wilmington, is also helping small business owners, both in the Cape Fear area and across the country, access capital through P3s.
“We have seen a decline in interest in this second round of PPP, including the 14-day window for companies with less than 20 employees,” Live Oak Bank officials said in an email.
“We continue to encourage small business owners to weigh all options for financing needs as they navigate the impacts of the pandemic and we remain committed to putting capital in their hands through the various SBA programs. “, said officials.
Another option outside of PPP that local businesses are starting to take advantage of is improving loans to the SBA’s 7 (a) and 504 loan programs, which opened last month.
These improvements and additional support through the SBA and the federal government give companies more confidence to move forward with their business plans, said Lindsay Harkey, senior vice president and head of healthcare financing at Live Oak Bank.
“This is the best time to work with the SBA to secure an SBA loan in general,” Harkey said. “That in itself helps us create new jobs, especially if it’s a business that has just started or is ready to expand. It has been really interesting.
The SBA began with improvements to its 504 and 7 (a) loan programs on February 1.
Loans give lenders more options to help struggling businesses or those looking to grow, with some differences in programs.
Typically, with a 7 (a) loan, from a lender’s perspective, a loan works specifically with a lender such as Live Oak Bank to create and secure the loan.
But with the 504 loans, there are two different lending entities, with 50% of the loan going through Live Oak Bank and 40% through a government-run SBA office that is part of the program, with the borrower putting in around 10%, a- she declared. .
“Obviously, the terms of these two loans look a little different. Sometimes the 504 loans can have slightly lower rates, but each has a number of advantages and disadvantages,” Harkey said. “I repeat, most people pick or choose a 7 (a) or 504 loan based on the type of project or the type of financing they need, whichever type is best for each of those. “
The new improvements are expected to last until the end of September.
“So there is a bit of timing as well, so I just suggest people take a look at it ASAP, in case the money runs out, or if it gets through September, it will be here. before we know it, ”Harkey said.
There are also additional improvements for industries that have been hit hardest by the COVID-19 pandemic, she said.
“Overall, the new loan issuance has been great,” Harkey said. “There was this huge gap, through COVID and until 2020, businesses have either been hit extremely hard or sometimes some of them are even better on the other end.”
“I think the improvements help us to try to level that out a bit; get those hardest hit back on their feet,” Harkey said. “And those who may not have been so badly hit, allow them to save their plans, to continue to develop, to continue to create jobs… And the borrowers are obviously very enthusiastic.”
More details on the loan enhancements to the SBA’s 7 (a) and 504 programs will be in Jenny Callison’s banking column online and in the Friday print edition of the Greater Wilmington Business Journal.