Christopher Watson is senior vice president and senior lending officer of the business banking division at Webster Five.
Updated: May 24, 2021
10 Things
4 Things I know about ... non-PPP small business lending options
By Christopher Watson
Small businesses are the economic lifeblood of our communities. They create the majority of new jobs and account for nearly half of all U.S. economic activity, but most operate on tight margins and are vulnerable during economic upheaval. The COVID-19 pandemic shutdowns had a drastic impact on many small businesses. Two rounds of Paycheck Protection Program loans provided critical support, but in early May, the funding dried up for most.
4) Bridging the gap - While the first PPP funding released in March 2020 was a free-for-all across the business spectrum, the second round prioritized small businesses. To qualify, borrowers had to show a minimum 25% revenue decrease in any quarter year-over-year, weeding out many large- and medium-sized companies experiencing less financial impact. At Webster Five, more than 75% of second-round loans were for less than $100,000, showing the program hit the mark.
Although PPP funds are nearly exhausted, there is good news for small businesses. The Small Business Administration is allowing preferred lenders, like Webster Five, to expedite SBA-guaranteed loans up to $1 million through Dec. 31. The SBA waived fees through September. The SBA is addressing potential strain on cash flow by allowing loans to be structured with longer terms.
3) Community banks play a vital role - Community banks were at the forefront of helping small businesses secure PPP loans, which is no surprise considering their longstanding local relationships. The same is true in the transition back to traditional lending. Local banks are an integral part of their communities, and the money they lend is based on deposits from customers who benefit from vital local economies.
2) What to expect when applying for a new loan - It is possible for a lender to get money to a business in just two or three days after loan approval. In order to complete the application smoothly, borrowers need to provide current information including tax transcripts, year-to-date income and expense statements, prior statements showing business operations pre-pandemic, and realistic predictions for recovery. It helps to be prepared and work with an experienced loan officer.
1) Supporting small businesses - Communities continue to rally behind local shops and restaurants, but many small businesses are still trying to hold on as the world slowly re-opens. They need and deserve support because just as small businesses were key to economic growth before COVID, they will be crucial to our economic recovery as we emerge from the pandemic.
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