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How bike shops can apply for the Small Business Administration's PPP program

Published April 7, 2020
Patience and persistence needed when applying for SBA's PPP loan, official says.

WASHINGTON (BRAIN) — Steve White urges patience and persistence during the rollout of the Paycheck Protection Program that authorizes billions of dollars in forgivable small-business loans for retailers affected by the COVID-19 pandemic.

Plagued by glitches and delays from quickly met loan caps, and application and technical issues with lenders, the new Small Business Administration program has frustrated many since it went online Friday.

"Those of you who have reached out to your lenders and they weren't able to take you yet, I would encourage you to reach out to them again," said White, an SBA lead lender relations specialist and participant in Tuesday's PeopleForBikes COVID-19 webinar.

"Have patience and be persistent with your request. Everyone is dealing with some backlog issues. It's nothing more than bringing on a brand new system that everyone has to learn together."

The half-hour webinar also featured Burl Kelton, SBA public affairs specialist, and updated approximately 122 participants on the programs and resources available to assist retailers. While White detailed the PPP, Kelton outlined the low-interest and long-term direct federal loan programs available.

While empathizing with many retailers' PPP application frustrations, White said the sheer size of the program, authorizing up to $349 billion in forgivable loans to small businesses with fewer than 500 employees, requires time to implement.

"The reality is this is a huge program, $349 billion dollars," he said. "We're still in the first calendar week of rolling it out. It's brand new. It's brand new to Congress. It's brand new to local leaders. It's brand new to us (SBA). It's brand new to lenders. A program of this size, there is definitely going to be minor technical glitches along the way."

White said getting lenders up to speed on the SBA's electronic platform used to submit loans was and continues to be a big hurdle. "In the past, lenders did it at a much slower and spread-out rate," White said. "As you can imagine, lenders need a large portion of their staff to take these applications and input them and have to bring more people aboard and train them in the process. And we're still doing that literally as we speak. Me and my team worked night and day last week and through this weekend, and it looks like it will be another long night to bring in lenders on board to do that."

For retailers, that's where patience will pay off. As for persistence, White advised those who have yet to submit an application or find a federally regulated lender to not give up. For example, he said many lenders are processing existing customers' applications first before moving to others.

Wells Fargo quickly reached its loan loss reserve limit and stopped accepting applications. "Just know, throughout this process, there will be some starts and some stops," White said. "And that's going to be with every lender, not just Wells Fargo."

To further help small businesses, PeopleForBikes said bipartisan support in the Senate exists to draft additional stimulus packages this week to help the PPP. "Nothing is official yet, but it's what we're hearing and anticipating because of the strong response for this program," said Noa Banayan, PeopleForBikes' federal affairs manager.

The PPP was created as an employee retention program. The loan amount will be forgiven if:

  • The loan proceeds are used to cover payroll costs and most mortgage interest, rent, and utility costs over the eight-week period after the loan is made.
  • Employee and compensation levels are maintained. Payroll is capped at $100,000 on an annual basis for each employee. Due to likely high subscription, it's anticipated that not more than 25% of the forgiven amount will be for non-payroll costs.
  • Loan payments will be deferred for six months.

Current SBA loan holders are eligible to have their next six months of payments erased as part of its Small Business Debt Relief Program. The SBA will make those payments, retroactive to March 27. 

Topics associated with this article: Coronavirus

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