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  1. #1
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    Sba lenders opting out of ppp

    I have been told by 4 of the SBA lenders I work with that they are opting out of the PPP programs. They are only working with existing customers. This includes Newtek and 3 large banks. The reason for them opting out is they are saying it cost to much to process and service the loans that are only paying half a percent interest for 2 years.

    Anyone talking to other banks who want the business???

    Mike

  2. #2
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    Approved lenders for SBA can make up to 5%. The NACLB if you are part of, will give you access to refer and earn up to 1%. FINWISE sponsored the training today for the NACLB . they will be one FDIC bank taking on this task. I don't know if Smart Biz is paying agents for this, but, they are promoting it on their site. smartbizloans.com

  3. #3
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    I am aware of what the payments are - but the banks are all opting out because of the cost. I was told by each of these lenders that the majority of these loans will be less than 100,000 dollars and it still has to be processed into the SBA System. They do not want to do the microlending. The banks borrow money from the Fed at .25 right now a month ago it was 1.75 percent. So on a 50k loan the bank would Earn 2500 dollars. and be stuck collecting the money for 2 years and if the Feds Raise the inter bank rate the banks have loans loosing money.

  4. #4
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    Lendio is promoting this program so maybe they are setup to do these loans? Maybe you can send them thru them if they allow? There are prob a ton of SBA approved companies out there. It sounds like it's broad in terms of who they are allowing to facilitate this

  5. #5
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    Directly from the SBA Website

    Loan Details and Forgiveness
    This loan has a maturity of 2 years and an interest rate of .5%. (Unless this is a typo error it .5% not 5.0%)

    I'm on a large conference call every morning with the SBA Office in Florida - check in and listen.

    One statement made multiple times, "Information is fluid"
    Dave Lambert, Business Development
    dave@fcbankcard.com
    Merchant Services Consultant
    High Risk Merchant Payment Solutions
    SBA 7(a) Loans & Short-Term Funding
    T/VM: 727-291-7890
    Office: 727-233-1111
    Skype: fc-financial

  6. #6
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    This program isn’t worth the manpower hours it takes to process them.

    Lenders have a finite number of dollars to lend, and who wants to have a considerable amount of money tied up in this when they can lend out at 8% per year. Additionally, they will have to use up manpower and resources on the backend with the whole forgiveness aspect.

    It only makes sense to handle existing customers so to avoid having them poached and to make sure their existing customers’ facilities aren’t strained.

  7. #7
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    Quote Originally Posted by WestCoastFunding View Post
    This program isn’t worth the manpower hours it takes to process them.

    Lenders have a finite number of dollars to lend, and who wants to have a considerable amount of money tied up in this when they can lend out at 8% per year. Additionally, they will have to use up manpower and resources on the backend with the whole forgiveness aspect.

    It only makes sense to handle existing customers so to avoid having them poached and to make sure their existing customers’ facilities aren’t strained.
    ^^^This This This This This^^^ Applies to trying to chase new SBA loans too. Know your craft and don't waste time. Plus common sense and banging the phones communicating. There is no gold at the end of a rainbow that doesn't exist. Your "book" needed to be built to withstand. That being said, nobody will even nearly fully withstand the next 6-8 weeks in terms of SMB funding/lending. #BackfillThePipe
    Last edited by HDF; 04-02-2020 at 12:47 AM.

  8. #8
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    Quote Originally Posted by westcoastfunding View Post
    this program isn’t worth the manpower hours it takes to process them.

    Lenders have a finite number of dollars to lend, and who wants to have a considerable amount of money tied up in this when they can lend out at 8% per year. Additionally, they will have to use up manpower and resources on the backend with the whole forgiveness aspect.

    It only makes sense to handle existing customers so to avoid having them poached and to make sure their existing customers’ facilities aren’t strained.
    bingo!
    Hedley Lamarr......That's Hedley

  9. #9
    Senior Member Reputation points: 7556 cmarks's Avatar
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    Quote Originally Posted by michaelh View Post
    I am aware of what the payments are - but the banks are all opting out because of the cost. I was told by each of these lenders that the majority of these loans will be less than 100,000 dollars and it still has to be processed into the SBA System. They do not want to do the microlending. The banks borrow money from the Fed at .25 right now a month ago it was 1.75 percent. So on a 50k loan the bank would Earn 2500 dollars. and be stuck collecting the money for 2 years and if the Feds Raise the inter bank rate the banks have loans loosing money.
    Most of the loans will be forgiven, grants, probably 90% of them unless business owner is really messes up and doesnt use it for payroll. its the governments money putting 350 billion into it, not the banks(long term).
    The Fed didnt say, hey, heres a good idea, lets take 350 billion price tag to the tax payers, tell the banks they have to loan it out and forgive it....The front end 5% fee for 350k or less is mainly it.

    So to think these sba lenders are thinking most of them will go to maturity isnt reality.
    Chris Marks
    funderintel.com

  10. #10
    You can ad Celtic to the list of SBA lenders opting only to process PPP loans for their existing customers.

    For the limited upside (5%), it looks like many SBA lenders don't see it as way to gain future customers or AUM-

  11. #11
    Senior Member Reputation points: 16117 capaxess's Avatar
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    Quote Originally Posted by WestCoastFunding View Post
    This program isn’t worth the manpower hours it takes to process them.

    Lenders have a finite number of dollars to lend, and who wants to have a considerable amount of money tied up in this when they can lend out at 8% per year. Additionally, they will have to use up manpower and resources on the backend with the whole forgiveness aspect.

    It only makes sense to handle existing customers so to avoid having them poached and to make sure their existing customers’ facilities aren’t strained.
    Correct-o-mundo! This is a gift from the government to banks who have, until now, been such a good source of business for me.

    The SBA gives them finite but essentially free money to hand out to their "preferred" clients and charge them up to 5% for it with no risk; nice!

    Above all, they make banks the gatekeepers to approve "agents" that get paid whatever pittance of the government guaranteed fee they choose. And, just to make sure, they also make it illegal to charge outside fees to the client.

    Cash is the commodity for our industry and pricing it and/or risk right now in these conditions is challenging to say the least. Add to that the government printing new fiat into this clusterf#$k and you have our current predicament.

    We'll eventually get to a point where the dust has settled, all the free money is placed and price discovery on cash returns to it's foundations of risk vs reward. Carry on and stay positive, there will be as many or more opportunities as there will be risks!

  12. #12
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    From Newtek:

    Due to the overwhelming volume of referrals, and the fact that the CARES PPP loan is approximately a 6 month loan with limited economics, Newtek won’t recognize (pay) any referral fees to 3rd party providers under this newly established program during this dire economic crisis. This is for CARES PPP loans only. All other 7A loans, 504 loans, and business service fees will still be enforced at this time. Given that the bill still does not have rules, and economics are not known, we may ultimately pay something for referrals under CARES & PPP but will not confirm that at this time.

  13. #13
    Senior Member Reputation points: 16117 capaxess's Avatar
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    Quote Originally Posted by WestCoastFunding View Post
    This program isn’t worth the manpower hours it takes to process them.

    Lenders have a finite number of dollars to lend, and who wants to have a considerable amount of money tied up in this when they can lend out at 8% per year. Additionally, they will have to use up manpower and resources on the backend with the whole forgiveness aspect.

    It only makes sense to handle existing customers so to avoid having them poached and to make sure their existing customers’ facilities aren’t strained.
    You called it WC:

    https://www.zerohedge.com/economics/...verge-collapse

  14. #14
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    i disagree. kabbage, lendio, and many other fintechs are going to do PPP

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