The Small Business Administration is working with lenders, business organizations and community groups to offer financial assistance in areas affected by civil unrest. SBA Great Lakes Region Administrator Robert Scott is traveling the region to deliver the message.
Scott was in Minneapolis on August 27 and 28 to visit with lenders and borrowers. SBA low-interest federal loans for disaster-related damages can be used by businesses and individuals to address physical damages and economic injury caused by civil unrest. Rioting has caused damage this summer in Minneapolis, Milwaukee, Chicago and elsewhere in the Great Lakes Region, as well as throughout the country.
Scott talked about the small businesses that might make use of such assistance, including the owner of a hair salon who borrowed money to rebuild after her building was destroyed by fire, a restaurant that had to change its business model when it could no longer offer sit-down dining, and a construction company that struggled to keep employees battling COVID.
Scott explained that when a disaster occurs, the SBA deploys specialists to the area to set up remote loan and assistance distribution points. Because of COVID, SBA has relied recently on local SBA staff to handle those duties. “The people in the Minnesota office, and the other offices in the region, have done a great job with these programs during these unusual times,” he said.
At the same time, SBA activity is at an all time high due to the Paycheck Protection Program. SBA wants to make the most of this activity. Many banks initiated or rekindled relationships with the SBA to provide PPP loans to customers; now the SBA is encouraging those lenders to broaden their relationship by offering other SBA products. Scott said the SBA is undertaking an effort to develop nascent relationships with lenders that did little or no business with it in the past. Scott said the SBA is conducting webinars for PPP lenders who have never before done business with SBA.
Prior to the PPP, about 1,800 lenders were active with SBA; today that number stands at 5,500.
“We really would like to get more lenders active with our traditional SBA products, such as the 7(a) program,” Scott said. The 7(a) loan program is the SBA’s primary program for providing financial assistance to small businesses.
The deadline to apply for PPP loans was August 8; soon, borrowers are likely to file for loan forgiveness. Scott said he is hopeful that Congress will pass legislation automatically forgiving any PPP loan of $150,000 or less. “There has been a lot of discussion about this, and I believe it will happen,” he said.
Scott also noted the SBA is waiting for direction from Congress or President Trump on how to utilize $130 billion in PPP money that was not loaned out.