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Re: Ask the Expert: Small Business Recovery Loans and Small Business Finance Tips

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Message 11 of 43

Ellen,

 

I'm glad to hear you finally have the advance. It's not much but I hope it helps at least a little. We continue to process every application after the advance is sent. As of now a loan decision takes about thirty days. I know this is a long time but we have had millions of applications, something that has never happened before, even during major natural events like Hurricane Harvey a few years ago. We are also in the process of hiring temporary loan processors to help us get through all the applications. This is our normal practice during big surges in applications but the current surge has dwarfed everything that came before it. 

Of course this means we cannot communicate as frequently with you as you would like. Here's what I mean. Let's say I get the job of calling or e-mailing applicants with status updates, and let's say each of those takes me two minutes. If I do that 200 times/day, that's 400 minutes, or 6.67 hours/day making calls or sending e-mail updates. 
But how many loan applications can I process in 6.67 hours? 
That is the fundamental problem we have. But as I said, we are hiring more people and we should be able to speed things up. 

For now, just know if you submitted the application before last Wednesday and got your application number, then you are in the queue and we will get to it. 

Best, 

 

David Hincapie

Economic Development Specialist
Washington Metropolitan Area District Office (WMADO)
U.S. Small Business Administration

david.hincapie@sba.gov

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Re: Ask the Expert: Small Business Recovery Loans and Small Business Finance Tips

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Message 12 of 43

My wife and I have our B&B set up as a 2-person LLC in Virginia so all income and profits pass through from the business to our personal 1040 for income tax purposes. Our income from the business is highly variable and we pay ourselves through EFTs from our business checking account to our personal checking account. We are closed by the governor's mandate so we have lost our income. We don't have any employees beside ourselves and we don't issue paychecks to ourselves so we have no traditional proof of income. I know there are forgivable SBA loans for small businesses but none seem to apply to businesses like ours. How do we get a forgivable loan with just EFTs for proof of income?

Larry

Gracefield Hall ™ Bed & Breakfast

Your hosts, Larry & Patricia Reynolds
https://www.GracefieldHallBnB.com

 
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Re: Ask the Expert: Small Business Recovery Loans and Small Business Finance Tips

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Message 13 of 43

We have applied for and received the SBA advance. We are also interested in the loan and want to know when that will be coming? 

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Re: Ask the Expert: Small Business Recovery Loans and Small Business Finance Tips

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Message 14 of 43

meeting APRIL 27TH

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Finance Coach

Re: Ask the Expert: Small Business Recovery Loans and Small Business Finance Tips

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Message 15 of 43

Tons of new lenders are emerging to participate in the anticipated second wave of funding of the SBA PPP loans.  Many payroll providers, including QuickBooks are helping small businesses gather the necessary documentation and information in advance of the programs roll out.  Some of these payroll providers are working with SBA lenders, to process the applications seamlessly.

 

 

Belva Anakwenze
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Re: Ask the Expert: Small Business Recovery Loans and Small Business Finance Tips

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Message 16 of 43

The most important thing to do is to understand the difference between the SBA programs.

 

The Economic Injury Disaster Loan (EIDL) is a loan for working capital. It is the oldest of the programs and can be used for payroll, mortgage payments, notes payable, accounts payable, and other obligations the business would have been able to cover under normal circumstances. The loan is designed to be easy to pay back. The rate is 3.75% for a term of up to thirty years, and the first payment is deferred for twelve months (but interest does accrue during those twelve months). There is no pre-payment penalty. 

 

The Paycheck Protection Program (PPP) is a forgivable loan intended primarily for payroll and payroll costs. If you use at least 75% of the loan money for payroll or payroll costs, and meet some other conditions, then the entire loan is forgiven. It is intended to pay employees and keep them on your payroll even if you are shut down and they cannot work or if your operations are so reduced they cannot work their usual schedule. The purpose is to keep your trained workforce on the payroll so when you re-open fully you do not have to spend time and money hiring and training new employees. 

 

The SBA Debt Relief Program is for existing SBA 7(a), 504, or microloans. The SBA will automatically pay the principal, interest, and fees for six months to help your cash flow. The SBA will do the same for new 7(a), 504, or microloans issued prior to September 27, 2020. 

 

David Hincapie

Economic Development Specialist
Washington Metropolitan Area District Office (WMADO)
U.S. Small Business Administration

david.hincapie@sba.gov

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Small Business Coach

Re: Ask the Expert: Small Business Recovery Loans and Small Business Finance Tips

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Message 17 of 43

The most important thing to do is to understand the difference between the SBA programs.

 

The Economic Injury Disaster Loan (EIDL) is a loan for working capital. It is the oldest of the programs and can be used for payroll, mortgage payments, notes payable, accounts payable, and other obligations the business would have been able to cover under normal circumstances. The loan is designed to be easy to pay back. The rate is 3.75% for a term of up to thirty years, and the first payment is deferred for twelve months (but interest does accrue during those twelve months). There is no pre-payment penalty. 

 

The Paycheck Protection Program (PPP) is a forgivable loan intended primarily for payroll and payroll costs. If you use at least 75% of the loan money for payroll or payroll costs, and meet some other conditions, then the entire loan is forgiven. It is intended to pay employees and keep them on your payroll even if you are shut down and they cannot work or if your operations are so reduced they cannot work their usual schedule. The purpose is to keep your trained workforce on the payroll so when you re-open fully you do not have to spend time and money hiring and training new employees. 

 

The SBA Debt Relief Program is for existing SBA 7(a), 504, or microloans. The SBA will automatically pay the principal, interest, and fees for six months to help your cash flow. The SBA will do the same for new 7(a), 504, or microloans issued prior to September 27, 2020. 

 

David Hincapie

Economic Development Specialist
Washington Metropolitan Area District Office (WMADO)
U.S. Small Business Administration

david.hincapie@sba.gov

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AARP Expert

Re: Ask the Expert: Small Business Recovery Loans and Small Business Finance Tips

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Message 18 of 43

It is day four of our conversation with @DavidH519566 and @BelvaA who are serving as AARP's coaches this week to answer questions about how we can help small businesses survive druring this tough time.  @DavidH519566 recently mentioned that we are close to getting another stimulus package signed that will help more of our small businesses - good, good news.  This will also help those businesses who do not have a traditional banking relationship. 

 

Again, I want to remind you that AARP is here to help.  For employers or who have employees who are caregivers go to www.aarp.org/caregivingresources and visit www.aarp.org for more COVID-19 related resources.

 

We stand ready to take your questions!

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Re: Ask the Expert: Small Business Recovery Loans and Small Business Finance Tips

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Message 19 of 43

@DavidH519566 this is great news!  In preparation for the passing of the new stimulus money, is there something small businesses should do, now?  I know many of our small businessese dont have a banking relationship with traditional banking institutions and thus perhaps they can work with their local CDFI's and credit unions.  What can you recommend our businesses do in preparation for what we all believe will be a postive outcome?

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Re: Ask the Expert: Small Business Recovery Loans and Small Business Finance Tips

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Message 20 of 43

@FeeBrown 

 

We do know that this will not last forever, but we do not know when the economy will rebound.  We of course, would never suggest anyone pull from thier retirement accounts prematurely.  Individuals should exhaust every other possiblity first.

 

We should be looking at ways to adapt our business to keep up with the changing times.  We should also look at small business loans and grants.

 

Only once we have exhaused all other resourses, should we look at tapping into our retirement funds.  If that become necessary, there is some good news. The recently passed coronavirus bill allows individuals to withdraw as much as $100,000 from 401k and IRA accounts without a 10% early withdrawal penalty if you have been affected by COVID-19. 

 

 

Belva Anakwenze
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