Late Thursday afternoon I spoke with Brett Smith, director of the Small Business Development Center (SBDC) at Lehigh University. Funded by the Commonwealth of Pennsylvania and the Small Business Administration, the SBDC offers small businesses in Lehigh, Northampton, Northern Montgomery, and Upper Bucks Counties no-cost, confidential consultations to help them gain necessary knowledge to prosper, whether they are a 6-week-old company or 60-year-old one. As you can imagine, their services are in high demand these days. Brett was kind enough to talk with me for thirty minutes and answer some basic questions that small businesses may have, along with their strongest recommendations and most up-to-date resources.
"90% of our calls are about the two programs"
Brett walked me through what their staff of 8 has seen, and the common challenges that people are facing, when they come to the SBDC for assistance. Typically, businesses will reach out for many reasons - now, it's almost entirely for information on the Paycheck Protection Program (PPP), and the Economic Injury Disaster Loans (EIDL), newly available as part of the CARES Act. In the past month, SBDC webinars have seen a 500% increase in participation, and 270 new clients have reached out to the SBDC for assistance in addition to those with whom they've already worked. In the first few frenetic days after the announcements of the PPP and EIDL, they simply managed the flood along with a focus on preparing for when applications opened. Now that the programs have launched, the staff is able to better direct clients to the proper resources and answer questions that actually have rules or guidance behind them.
Most Common Questions, and Some Answers
According to Brett, most people who contact the SBDC want to understand which loans are forgivable, and what banks are accepting new clients. As I mentioned in a previous post, many banks are restricting applicants to current clients. However, the SBDC sees a light on the horizon as new, non-SBA lenders are equipped over the next few weeks to begin accepting these loans. This reprieve will be welcome but may not be quick enough for some businesses that are suffering. Other takeaways:
- The timing on all loans is slower than advertised due to unanticipated volume - those 3 days for EIDL advances? Brett hasn't yet heard from clients that they have received their funds yet, a gap of two weeks. And PPP turnaround is about 10 days, an increase in guidance from Treasury from their previous estimate of 5 days (a couple of these PPP loans have gone through as of Thursday).
- There are no fees to apply to either loan. If you aren't sure what to apply for, you apply for both types as long as the purpose of the loans doesn't overlap. And, if they're being processed you can withdraw at any time if you determine one isn't necessary for your business.
- There is a misconception that EIDL advances are a flat $10,000, but that's not the case, according to the SBDC. Advances are calculated using a formula based roughly on the number of employees, so not all businesses will receive the full $10,000. That advance is forgivable.
Resources
The top resources that the SBDC offers any client are direct links to the US Treasury site, and the Small Business Administration, because those will always be the most updated, as changes and rules refinements continue to come through. These sites include what documentation you'll need to gather, as well. They are:
- Treasury: the Paycheck Protection Program
- Small Business Administration: Economic Injury Disaster Loans
- The SBDC also has a resource guide - this is updated as often as possible. Not as definitive as the above but quite useful (and printable).
Finally, the SBDC top recommendations for small businesses:
- Get all your documentation together for both programs: legal and financial statements, tax returns, and payroll documentations.
- Understand that by applying, you are not committing to accepting the funds; you can withdraw later.
- Understand that in your application you can't specify a particular amount you are looking for. Loan amounts are based on a payroll formula, so it will be a pre-determined sum from the information and documents you provide.
- Talk to your current bank. If you are in dire straits and the turnaround time will be catastrophic, find out if your current bank can offer you flexible payment schedules, or to add or increase your line of credit with them. It's worth having the conversation with them, particularly if you need an immediate cash infusion.
For more information about the no-cost advice and consultation, webinars or other programming that the SBDC can offer, please contact them at 610-758-3980 or insbdc@lehigh.edu.