Steps to get new small business loans

A federal plan to help small businesses during the coronavirus pandemic could prove to be overly complex, but Rebel Cole, Ph.D., a finance professor in Florida Atlantic University’s College of Business, points out there are steps owners can take to improve their chances at securing relief.

Rebel Cole, Ph.D., a finance professor in Florida Atlantic University’s College of Business

The Paycheck Protection Program, part of the $2 trillion stimulus package signed by U.S. President Donald Trump last week, seeks to streamline the underwriting of loans to 30 million small businesses across the country by allowing applicants to complete a brief, two-page application and check boxes to verify the information they are submitting is truthful, according to Cole.

Lenders will charge applicants only 0.5 percent interest, but the loans can be forgiven if the businesses maintain 75 percent of their workers for two months and use the money for such expenses as payroll and rent. Self-employed owners can’t apply until April 10, though other small businesses can start applying today. (April 3).

Unfortunately, Cole predicts millions of small business owners won’t apply because they don’t know about the program or won’t understand the terms, including the forgiveness provision. Millions more likely won’t apply because they’re discouraged and expect to be turned down, according to Cole.

“This is a financial literacy issue,” Cole said. “I’d be surprised if even half of the 30 million owners get loans.”

Owners who intend to apply should contact their business bankers and find out what paperwork will be needed, said Cole, adding that owners should plan on submitting documentation on payroll and other qualifying expenses such as rent, as well as business tax returns for 2018 and 2019.

He also advises owners to plan their firms’ cash-flow needs for the next three months. If they have to stop paying the firms’ rent or mortgage, they should immediately contact their landlords or lenders and notify them that this is due to the pandemic. Owners who don’t know how to forecast cash flows should work with friends or relatives who do. Training is available through the Florida SBDC Network.

Cole said he’s encouraged that the program intends to streamline underwriting to prevent a huge backlog of applications.

“It might just work, but there are massive opportunities for fraud because of lack of formal underwriting,” he said. “I doubt that potential fraud is much of a priority right now. The critically important goal is to get the money out the door and into the hands of the small firms.”

Applications can be submitted through Small Business Administration lenders or federally insured banks and credit unions. Participating lenders can be found at sba.gov.

You May Also Like

Clamor Grows for More PPP

Anticipation is growing for Congress to free up another batch of PPP loans for small businesses as part of additional legislation to respond to the economic fallout from the COVID-19 pandemic. “For the past month, Congress has abandoned small businesses in turmoil,” said Small Business Majority Founder and CEO, John Arensmeyer, upon Congress’ return to

Heroes of the Pandemic

By Clarissa Buch and Sally-Ann O’Dowd • photography (where indicated) by Eduardo Schneider “It’s so terrifying because as a pregnant female, I’m considered immuno-compromised. If I get infected, my immune system won’t be able to fight off the virus as well.” Edmara Nieves Attending physician, emergency room, Broward Health Medical Center Background: Nieves earned her

Business as usual

In the aftermath of our spring feature on how companies were dealing with the shutdown, businesses from all over South Florida continue to share their pandemic stories with SFBW. Here are some of the recent businesses that reached out to us. By SFBW editorial staff   Tim Coffield President and CEO, YMCA of the Palm

Business as usual

[vc_row css_animation=”” row_type=”row” use_row_as_full_screen_section=”no” type=”full_width” angled_section=”no” text_align=”left” background_image_as_pattern=”without_pattern”][vc_column width=”2/3″][vc_column_text] By SFBW editorial staff Kevin Sheehan Jr. President, Bahamas Paradise Cruise Line Business backstory: The only two-night cruise sailing from the Port of Palm Beach to Grand Bahama Island and Nassau gives travelers a mini-getaway option that the larger cruise lines don’t—with many of the same

Other Posts

Inside the Design of Shoma Bay

Adriana Hoyos offers insights into her work at the 24-story condominium project.

Botanical Paradise in Boca Raton Lists for Nearly $15 Million

The home features a serene garden with a 40-foot waterfall, two lakes and plants from around the globe.

The Fleet Clubs Is on Track to Enter the Local Private Jet Market

“Our bespoke 737s offer the zenith of shared private travel both in personal space and in-flight service. From Loro Piana bedding to cut crystal glassware, ours is the finest service in the sky,” says Fleet Clubs co-founder and CEO Bernard Schwartz.

American Cancer Society to Host Evening of Hope Fundraiser

The nonprofit’s distinguished events portfolio has raised over $6 million in the last six years.