SBA Lenders: What steps are you taking with your borrowers?

searcher profile

March 21, 2020

by a searcher from University of Virginia-McIntire - McIntire School of Commerce in New York, NY, USA

This is a great community and there are a lot of thought leaders who post here on a regular basis. Obviously the situation is very fluid at the moment but what steps are SBA lenders taking with their borrowers during this difficult time?

What legislation has been passed / proposed?
What relief are you providing (interest only / suspending P&I)?
Where should borrowers go for questions?
What advice do you have for people who are at or near closing?

The SBA and its preferred lenders are going to be a critical part of the country's recovery in the months and years to come. We appreciate your hard work during this difficult time

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commentor profile
Reply by a lender
from University of Missouri in St. Louis, MO, USA
First and foremost, any banker should be talking to their existing customer base daily with details on programs the SBA has coming out as well as bank programs to help their borrowers.. Lenders hopefully sent the details on the SBA emergency program to their customers early in the process. I would prepare everyone that is currently processing an acquisition to bake into their analysis that things could change dramatically over the next days/weeks/months as banks access what is happening to their customer base. We as banks have yet to truly process the amount of pain that is coming and I think it would be prudent for anyone buying a business to understand that. Proposed legislation that should come out next week that could (nothing is approved yet) help in acquisitions with waiving guarantee fees and giving a higher guarantee (90% for banks). Everyone is still digesting this but I don't think this will be business as usual in the coming weeks. Glass half full: acquisitions could become a silver lining as a way for banks to put income on without a lot of risk based on the SBA guarantees. However, a lot of the businesses you are contemplating buying are getting absolutely crushed right now. Pay attention to the short term; do you have backup liquidity; what is happening to the employees and customer base of the company you are looking to buy; supply chain issues, etc? Lastly, this would be a good time to look at every bank holistically rather than just as an SBA lender. Bank stocks, like everyone, have been hit hard the last couple of weeks and will likely continue to be stung as we defer payments and see decreases in revenue as a result. Diversified banks with multiple revenue streams should have access to income to keep moving forward.
commentor profile
Reply by a lender
from Michigan State University in Newport Beach, CA, USA
With us (Bank of the West), it's business as usual. We're offering existing borrowers 90 days deferrals on payments, Other than that, there's nothing new. Trump's disaster loan is not tied to the banks (at the moment). People have to go directly to SBA.gov/disaster to obtain those funds, and they need to evidence that their business/cash flow has been hurt. Those funds are for working capital only. For acquisitions, you still need to come to the banks. Every lender will be treating this different, and case by case. There are no across-the-board mandates, as far as I've heard., however, this is a constantly evolving situation. Lenders still have the final say on what happens with their loans, so people should be calling the lender that they are/will be working with.
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