Clarification on different COVID-related SBA programs

March 26, 2020

by a searcher from Northwestern University - Kellogg School of Management in Denver, CO, USA

Hi all, I just spoke with my lender and wanted to share the following in case its helpful.

We need to distinguish SBA programs across four points:
(1) Payment Assistance on Existing SBA Loans - these are applications you submit to your original lender to get 3-4 months deferral on paying your existing SBA loans. These are being approved/processed relatively fast.
(2) EIDL - the economic injury disaster loan program. This went live last week and is what the SBA is struggling to handle due to overwhelming application volume, though they say these will be approved in###-###-#### days. This can be up to $2M per business based on estimated loss and is at a 3.75% rate.
(3) SBA Express Bridge Loans- $25K quickly processed loans from your original SBA lender to cover imminent needs, to be paid back w/ EIDL if approved.
(4) the covered loan program announced in yesterday's stimulus package. This is the $350B in small business loans to cover monthly expenses like payroll, rent and utilities. The loans would NOT have to be repaid if businesses maintained their workforce.

It's #4 that we all want more info on now but it's not yet available. I'm creating this thread so we can share more info on #4 as it becomes available. I will do the same!

Reply by a lender
from University of Missouri in St. Louis, MO, USA

Be prepared to have a little delay in these funds getting out once approved. The SBA has the banks getting the funds out. However, these loans will be different from traditional 7A loans. This will require banks either making exceptions to loan and documentation policies, or changing them altogether. Additionally the SBA will likely take a little time (1-2 weeks) to digest everything and filter the final logistics to the banks. Once that occurs your existing bank should be able to move quickly. However, know every bank will be inundated with requests and will be stretched from a capacity standpoint. Loan payment deferrals should be completed or near completion by now. But the actual funds here will take a bit of time to start to materialize.

Reply by a searcher
from University of Kentucky in Chicago, IL, USA

There are a lot of summaries of the CARES Act available based on the Senate approved bill. My understanding is the House is expected to approve that bill as is tomorrow. If you go to the site Rich Augustyn posted a few days ago they have a good summary. There is also a section by section summary that the law firm Akin Gump has on their COVID site that gives most of the specifics (or you can read the Senate bill for all the detail).

https://nipgroup.com/covid-19-resource-center/#Emergency-Funding

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