Here's how to avoid a common mistake small businesses make when applying for loans, according to an SBA official. (via CNBCMakeIt)
What re-opening the SBA loan process will look like
When the federal funding for the PPP loans dried up, Scott says it "flipped the switch off" at the agency and the SBA shut down the application process. That means currently at the SBA, "there are not any loans in the queue," Scott says. The SBA doesn't lend money directly — it guarantees loans provided through SBA-preferred financial institutions, such as banks, microlenders and even fintech companies like. In order to get a PPP loan, small business owners have to apply through a financial institution, which then submits the application to the SBA.
That said, there may be a pipeline of applications already with lenders, which are going to need to enter those loan requests into the SBA system once it's re-opened, assuming the new funding legislation passes. "There's probably a ton of lenders out there that have a build-up of applications," Scott says.told customers that should the SBA open another round of funding for the PPP loans, they will submit small business applications they have previously received at that time.
If that's the case for you, there are other lenders out there that you may be able to work with. While many of the PPP loan applications were filed through large banks, small businesses may find shorter lines and more personalized service if they work with smaller lenders, such as community banks, Scott says. In fact, the new bill specifically sets aside $60 billion
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