Banking association says to be patient with SBA loan process

The head of the Alabama Bankers Association advises business owners to be patient when applying for loans from the Small Business Administration to help deal with financial turmoil caused by the COVID-19 pandemic.

Scott Latham, President and CEO of ABA, said it was a time of growing need and unprecedented help. And while those looking for funds need quick action, the banks are ready to help. But the process will take time.

“As an industry, we are excited to be part of the solution,” said Latham. “The regulations that we follow are written almost as they arise. We’re trying to implement the biggest loan facility in SBA history, and we need a lot more than we get in terms of the details. This is our biggest challenge.

The ABA represents 126 banks across Alabama with combined deposits of over $ 100 billion.

Since the start of the pandemic, the SBA has offered businesses up to $ 10,000 with the SBA’s Economic Disaster Lending (EIDL) program and up to $ 10 million to businesses with the massive SBA program. $ 349 billion paycheck protection. The P3 began last Friday, with assurances from Congress that more money will be provided to help companies retain employees and mitigate damage. There is also relief for businesses with existing SBA loans.

However, loans have been slow in coming for several reasons. Banks are in some cases waiting for more advice from the Treasury Department, while others that are not traditionally SBA lenders are striving to participate. Add to that the pandemic control measures, which have limited lobbying time and meeting time with loan officers in bank lobbies, Latham said.

And then there’s the huge demand for loans and the infrastructure in place to meet the challenge. The SBA normally manages between $ 20 billion and $ 28 billion a year in loans, as it now attempts to disburse a much larger sum to businesses in less than two months during a pandemic.

The Wall Street Journal reported that last week, the SBA hired an outside mortgage company to help process 2,000 loan applications per minute, while hiring 7,000 agents to answer calls from business owners, cutting down on business times. ‘waiting. Surveys show that about 70 percent of small business owners nationwide have attempted to apply for a PPP loan, while half of those surveyed had applied for an EIDL loan.

And then there are the processes banks normally use to review applications, Latham said.

“There is multi-factor authentication and credentials, multiple layers within a bank that need to approve, calls and emails,” he said. “There are technological challenges, information and guidance, and governance challenges. “

At the same time, he said, the banks are realizing the scale of demand for loans and the strategy to provide quick relief. What Can Business Owners Do?

“We encourage them to line up all of their ducks as best they can before going to the bank,” Latham said. “Include materials that commemorate the type of business you have, partnerships, business licenses, tax returns, payroll authentication. If you have to go back and break it up, these loan officers are already stretched out, working every other day, turning people around. The bankers are more than ready to take that money out. “

If you receive funds, Now you need to think about how to prepare to use this money and document its use to avoid legal issues in the future.

At the same time, he said, be concerned about those who want to use the pandemic for fraudulent purposes. Protect all financial data, including debit and credit card information.

“No financial institution or government agency will ever call you to verify your account numbers, passwords,” he said. “If you get a call like this, hang up and call a number that you know belongs to your bank or your credit card. During times like this, the bad guys come out.

Elizabeth J. Harris