Small businesses don’t need to work through the SBA or its affiliated lenders to secure loans, but, rather, can apply for them at most any “federally insured depository institution, federally insured credit union, and Farm Credit System institution.” In other words, an eligible business owner should be able to walk into just about any FDIC bank and secure enough capital to cover payroll for two months.
I’m certain you will cover this in the webinar tonight, but the PPP loan has some significant limitations (esp when you have employed docs who make more than 100k). I’ve already approached my bank about the amount of PPP based on my payroll and it amounts to 70k* that potentially will get turned into a grant if employees are retained. My question is, is there a way to apply for PPP + line of credit (that ultimately becomes a loan) w SBA guarantee–or does that fall under a separate category (aka bank loan w personal collateral guarantee). My banker seemed confused at that question, which made me question the banker?!
Hi Dr. Brown-
Thanks for reaching out. You are correct, many practices have to limit the individuals above $100k- causing some problems. This will be addressed this evening.
You are wise to secure a line of credit in addition to the PPP loan. Just tell the banker you want to apply for both. If they can keep that straight, I’d question their ability to guide you and you might consider getting you accountant to have the call with the banker.
We are doing the same thing. We applied for PPP through the SBA 7(a) program. We separately have increased our LOC (to 3 months expenses) which is backed by the bank itself and is not federal. I am not aware of an LOC that is delivered via the SBA program. They have disaster loans but that is a different conversation/funding. The SBA will have to be collateralized by either your business revenue (usually % of revenue/y) or some personal collateral. That is what we found (down south of you in SA).
- Josh Tardy