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03-17-2020, 04:56 PM #1
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Disaster Loan Assistance
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03-17-2020, 05:28 PM #2
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Unfortunately only a handful of states have been certified to this point. The key is having the merchant create the account online, and then when it goes to the next step they need to see if their state is certified. Once certified, they need to begin the application immediately to get into the queue, but make sure the application is completed perfectly, because if done incorrectly they will have to resubmit app — which will start them at the beginning losing their spot.
These loans aren’t handled by banks, but by SBA loan officers themselves. And they have limited manpower which will be quickly overwhelmed. So what is supposed to be a 3 week process could turn out being 6 weeks if they aren’t at the front of the line.
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03-17-2020, 11:36 PM #3
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Yes. Also be prepared to only have an initial 25k, if approved, dispersed FIRST, then balance later. Assuming things hold form with the past. Which is very fluid at the moment. West is right, time to act is now. Historic time to pick up the phone or revisit clients/prospects. If suitable, down sell to bridge or interim financing.
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03-19-2020, 12:56 AM #4
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You can check if the merchant is eligible before creating an account by searching their state and county correct? Also are there any other qualifications? I would like to pre-qualify if possible
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03-19-2020, 04:23 AM #5
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Just need to see if the state is approved yet. Basically needs to be creditworthy as show they were successful before the disaster. Also have to prove that credit isn’t available elsewhere. Have to have all of financials ready (tax returns, income statements, balance sheets, A/R etc). Have to prove that they’ve been damaged economically. And it’s going to take months. I’m talking 3+ because there is no way they are staffed up for this. Also remember that about 90% of disaster loans historically have gone to individuals that had personal property claims, not business applicants. Among business applicants the approval rates have been a little less than 50%.
Last edited by WestCoastFunding; 03-19-2020 at 04:48 AM.
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03-19-2020, 07:58 AM #6
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03-19-2020, 07:59 AM #7
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SBA Updates Criteria on States for Requesting Disaster Assistance Loans for Small Businesses Impacted by Coronavirus (COVID-19)
Release Date:
Tuesday, March 17, 2020
Contact:
Jennifer.Kelly@sba.gov, (202) 205-7036
- Faster, Easier Qualification Process for States Seeking SBA Disaster Assistance. Historically, the SBA has required that any state or territory impacted by disaster provide documentation certifying that at least five small businesses have suffered substantial economic injury as a result of a disaster, with at least one business located in each declared county/parish. Under the just-released, revised criteria, states or territories are only required to certify that at least five small businesses within the state/territory have suffered substantial economic injury, regardless of where those businesses are located.
- Expanded, Statewide Access to SBA Disaster Assistance Loans for Small Businesses. SBA disaster assistance loans are typically only available to small businesses within counties identified as disaster areas by a Governor. Under the revised criteria issued today, disaster assistance loans will be available statewide following an economic injury declaration. This will apply to current and future disaster assistance declarations related to Coronavirus.
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03-19-2020, 09:34 AM #8
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SBAs are were it’s at, fellas. If you’re marketing is geared toward it, you can do quite well right now. Not saturated at all right now. And you filter out lunkhead brokers who can’t read financials.
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03-19-2020, 12:56 PM #9
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Are we allowed to charge fees?
Take a look at the email I got from SmartBiz last week:
https://share.streak.com/4JuzJyTxOk8cPug3mZYBGM
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03-19-2020, 01:26 PM #10
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3. PERMISSIBLE FEES THAT A LENDER OR AGENT MAY COLLECT FROM AN APPLICANT OR BORROWER IN CONNECTION WITH AN SBA-GUARANTEED LOAN
SECTION 120.221 FEES AND EXPENSES THAT THE LENDER MAY COLLECT FROM AN APPLICANT OR BORROWER
SBA proposed revisions to paragraphs (a) and (b) of this section. SBA proposed to amend § 120.221(a) to limit the total fees an Applicant can be charged by a Lender for assistance with obtaining an SBA-guaranteed loan. Regardless of what the fee is called (e.g., a packaging fee, application fee, etc.), the Lender would be permitted to collect a fee from the Applicant of no more than $2,500 for a loan up to and including $350,000, and no more than $5,000 for a loan over $350,000. With the exception of necessary out-of-pocket costs, such as filing or recording fees permitted in § 120.221(c) and legal fees that are charged on an hourly basis permitted in § 120.221(e), this is the only fee that a Lender may collect directly or indirectly from an Applicant for assistance with obtaining an SBA-guaranteed loan.
SBA recognizes that some Lenders may need to revise their policies, procedures or documentation in order to comply with the new limits on fees in § 120.221(a). In order to minimize the impact of the change on affected Lenders, SBA is not requiring compliance with revised § 120.221(a) until October 1, 2020. Until that time, Lenders are to continue to comply with the requirements in § 120.221(a) as published in the 2019 edition of the Code of Federal Regulations, and the guidance in SOP 50 10 5(K). However, considering the benefits that the new fee limits offer, SBA expects that many Lenders will want to comply with them before October 1, 2020. They are permitted to do so. SBA recommends that these Lenders document in each loan file their decision to use the new fee limits.
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03-19-2020, 01:39 PM #11
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Seems to me the lender will be capped at those amount to collect a fee, but I don’t see any reason you as a broker can’t have your own fee agreement in place. Just seems that on the backend you’d be at the mercy of the lender. With guys like Wells Fargo, you probably won’t be able to have them disperse however many points you agreed to with the borrower at closing docs. You’d have to have the borrower send you the fee directly. Other lenders would have to pay you the referral fee directly, rather than having the lender charge the borrower your 1-2% which is then given to you.
So, to me it’s reasonable to collect a $2500 upfront or at term sheet, and then collect a fee direcrly from the lender, or have a separate agreement in place with the borrower that calls for a success fee after closing — which the borrower would have to wire to you. Hopefully they honor it.
Regardless, this isn’t totally in effect until OCT.
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03-20-2020, 06:58 PM #12
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Do merchants with ITINs qualify for disaster loans?
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03-20-2020, 07:37 PM #13
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03-20-2020, 09:57 PM #14
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03-20-2020, 10:09 PM #15
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03-20-2020, 11:18 PM #16
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Ok, I'm 95% positive that they will qualify. With the regular SBA loan programs like 7a and its sub programs (like Express) and 504, the answer is no. But under previous SBA disaster loan laungauge "Qualified non-citizens" do qualify. But, I have no idea if language has been updated recently to change it.
"Aliens. U. S. Citizens, non-citizen nationals, and qualified aliens are eligible for
disaster loans. Individuals not lawfully in the United States are not qualified aliens
and are not eligible....
(1) Home Loan Applicants. We ask home loan applicants if they are a U.S.
citizen on the application. Loan approval for qualified aliens is a matter of
credit just as it is for all other applicants.
(2) Sole Proprietors. We ask sole proprietors if they are a U.S. citizen on the
application. Loan approval for qualified aliens is a matter of credit just as it is
for all other applicants.
(3) Corporations. Alien-owned corporations properly registered and licensed in
the state where the disaster occurred are eligible.
(4) Partnerships. Alien-owned partnerships properly registered and licensed in
the state where the disaster occurred are eligible. If any general partners or
limited partners owning 20 percent or more of the applicant business are in
the USA, they must be a qualified alien.
(5) Limited Liability Entities (LLE). Alien-owned LLEs properly registered and
licensed in the state where the disaster occurred are eligible. If any member
owning 20 percent or more of the applicant business is in the USA, they
must be a qualified alien.
https://www.sba.gov/sites/default/fi...0%2030%207.pdf
But here's the thing: does this just relate to just physical damage? Or does this include "economic injury" associated with businesses? I have absolutely no idea.Last edited by WestCoastFunding; 03-20-2020 at 11:21 PM.
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03-23-2020, 01:43 AM #17
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A shelter in place starts for me tomorrow night.. Filling out the info on the sba site.... Thanks.
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03-23-2020, 06:44 PM #18
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03-23-2020, 07:30 PM #19
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Our sales agents aka brokers able to sell the sba loan disaster relief loans???????????????????????????????????????
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03-24-2020, 05:28 AM #20
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03-24-2020, 05:29 AM #21
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03-24-2020, 08:59 AM #22
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03-24-2020, 09:05 AM #23
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Honestly, expect to see everything move away from the Disaster Loan Program and towards a beefed up SBA Express. The Disaster Loan program should never have been the the used to help in this situation. The SBA loan officers are few and they just don’t have enough to handle it. When things move toward the SBA Express you then unleash tens of thousands of bank SBA loan underwriters who are proficient in this stuff. Not saying the disaster loan program is useless, but ..... well yeah, actually it’s almost useless.
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03-24-2020, 09:20 AM #24
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03-24-2020, 09:55 AM #25
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Clients are asking me to complete the SBA Disaster Loan application for them.
They are offering to pay me for this service as well.
Are we allowed to charge for this service? If so, what's a fair dollar amount?
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