April 1, 2020; Washington Post
Nonprofits all over the country are scrambling to position themselves to apply ASAP for the paycheck protection CARES loans that, if administered properly, will be ultimately forgiven.
Applications for nonprofits and small businesses will purportedly begin processing on Friday, while sole proprietors and independent contractors will have to wait a week longer. Because the call for them is likely to be overwhelming, and because the loans will be processed on a first-come, first-served basis, it will be critically important for nonprofits to select an SBA lender who is prepared to work with you. (Some are having problems finding one, so check in early.)
To make sure your ducks are in a row to the greatest extent possible, we suggest registering for a webinar being aired at 11 today by our partner, FMA. This session will familiarize you with the key documents and numbers you will need when you apply.
The intent is to avoid layoffs and other damage through an expedited process that gets loans made in a single day. In practice, it may be longer and more unwieldy than planned. The Washington Post reports, “Even with the SBA’s review out of the way, same-day approvals will still be a challenge. The fastest bank loan applications usually incorporate a 1-week review.”
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Hicham Oudghiri, chief executive of a small-business-focused data analytics and fraud detection company called Enigma Technologies, said it would be difficult for most banks to meet that target without substantially increasing the risk of fraud. Most small businesses will take days just gathering the documents they need to apply, he said.
“Even the most sophisticated banks will have a hard time short cutting their processes to get money out the door this fast,” said Oudghiri.
So, now is the time to gather up all pertinent financial information and put your financial team, whatever that may look like, on speed dial. Verify who in your organization can authorize such a loan, and find a resource person at the lending institution who will agree to be consulted. They may just be getting up to speed, but if you can, ask them in advance what you will need in hand. And then wait, because final eligibility guidelines are not yet out.
Detailed application guidelines are available on the Small Business Administration’s website.—Ruth McCambridge