How Our Clients Navigated the SBA Loan Programs

Earlier this year, the spread of COVID-19 into the United States created the most unprecedented upheaval most business owners have seen in their lifetimes. Remember how it felt like “another shoe dropped” every few hours as we learned about cancellations of sports leagues, concerts, and conventions followed by escalating “stay-at-home” orders across the country?

Some business owners went into denial, some panicked, and others rolled up their sleeves and got to work. We at The Alexander Group got to work.

We dove into the minutia of the rapidly evolving financial programs from the US Government like the Emergency Income Disaster Loans (EIDL) from the Small Business Administration (SBA) followed by the EIDL Grants and the Paycheck Protection Program (PPP) that were part of the CARES Act.

Our team recognized the complications of the EIDL and PPP funding options early on and quickly developed a plan of action to support our clients. Our peer boards shifted from monthly half-day meetings to weekly one-hour Zoom meetings for everyone to collaborate and share best practices for navigating these tricky waters. Discussions centered around industry guidance, how to complete documentation correctly, and optimizing workflows with banks, bookkeepers, and accountants.

In total, Alexander Group clients received over $8,000,000 as a combined amount of PPP loans, $93,000 in EIDL Advance Grants, and $2,500,000 in EIDL loans.

These weekly meetings, supplemented with ongoing coaching sessions, revealed innovative and efficient solutions for the obstacles that stood in the way of small business owners receiving financial help. In some cases, the solution went so far as assistance with switching banks from institutions that were slow to keep up with SBA loan programs to those who did more homework and worked harder for their clients to get them approved. By the end of May, all of our clients who applied for an EIDL advance or PPP funding had received that money to help improve the odds of outlasting the pandemic and beyond.

The EIDL is a 30-year loan with an interest rate of 3.75% for small businesses and 2.75% for non-profits. It does not require payment for the first 12 months and the funds can be used towards operating expenses like employee payroll and capital improvements that will position the business for success in the months and years ahead.

In total, Alexander Group clients received over $8,000,000 as a combined amount of PPP loans, $93,000 in EIDL Advance Grants, and $2,500,000 in EIDL loans.

SBA Programs for Disaster Relief

Organizations of all sizes across the world are still reeling from the impact of the current pandemic, and this is especially true for small business owners who are facing down the biggest challenges of their entrepreneurial journey. While the SBA has long been a resource that owners can turn to for funding options, even the SBA has been struggling to simplify processes to help keep cash flowing.

One of these options is Emergency Injury Disaster Loan (EIDL), a program that’s been around for some time to help business owners recover financial losses due to natural disasters like catastrophic flooding or hurricanes. The SBA administers these loans and the CARES Act added an “advance” that allows EIDL funding to be wired to business checking accounts.

At the onset of the pandemic, the amount of this advance was a flat $10,000 but after some consideration, the SBA adjusted totals to equal $1,000 for each employee for businesses that employed fewer than 10 workers. Once the money was deposited, there was no follow-up support or communication from the SBA — owners simply saw a deposit from the U.S. Treasury based on their headcount.

When EIDL applications began to overwhelm the SBA as the financial impact of the pandemic deepened, the CARES Act emerged to offer additional relief for small business owners looking for financial support. The EIDL Advance and the Paycheck Protection Program (PPP) were developed, and the SBA was charged with administering as well.

What makes PPP different from other SBA loan programs is that a portion of the funding will be forgivable; when the money is used on business expenses like payroll, rent, and utilities, business owners will not be required to pay it back. Initially, it was dictated that the first 8 weeks of expenses after receiving this loan would be forgiven, but a new bill (H.R. 7010) signed on June 5 extended that window to 24 weeks. With more breathing room, it became even more likely that all of the PPP loans would be forgiven as long as business owners paid their employees, their rent, and their utility bills.

As the SBA saw exponential growth in PPP applications, small business owners had a growing list of questions about eligibility, forgiveness guidelines, and the small print that explained exactly how these processes work. Even a small miscommunication or misinterpretation could put owners in a position to be deeper in debt and ineligibility for loan forgiveness.

For business owners who didn’t reach out for help and resources, the window is rapidly closing to participate in the SBA loan programs. While new EIDL Advance and loan applications are being accepted, the PPP program closes to new applications on June 30. Unsurprisingly, there is a backlog, and owners who have waited will have to wait even longer to secure financing.

Now is the time to connect with The Alexander Group if you’re a business owner or entrepreneur who is struggling to understand how to secure funding quickly, easily, and without putting your business at risk of facing even more financial risk. You’ll work with our team and your peers to get further, gain important insight, and tap into vital resources that keep your doors open. We’re waiting to start a discussion about how to move forward — get in touch.