We are field staff at the SBA, ask us [almost] anything.

 

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We are field staff at the SBA, ask us [almost] anything.

***Edit: I’m signing off for questions for the night folks. Thank you for your time and fantastic questions. I really appreciated it. ***

Hi everyone,

My name is Noah and I work out of the San Francisco District Office of the U.S. Small Business Administration. Our office has been working closely with business owners and doing our best to manage calls right now. The local offices are very small outreach teams and I spend most of my days right now talking directly with our local business owners about how the shelter-in-place orders are impacting folks.

Everything from cake shops and hairdressers to tech start-ups and manufacturers come through my (now virtual) door. That’s actually normal, even during non-disaster situations! Regardless of industry and stage the uncertainty that folks share with me is universal. We’re doing what we can to alleviate some of that, where we can but also be transparent and honest about our own limitations.

When working with business owners I work really hard to make it clear what’s known and what’s not known, as well as not provide answers that I can’t answer. Sometimes I make mistakes.

Each morning our team gets incorporates new updates into our discussions as these programs are changing daily right now.

Here’s what I can’t do (unfortunately)

* Give you (specifically) a status update on either your EIDL or PPP application
* Give you (specifically) a timeline
* Explain why congress did X or tell you what congress will do
* Speak for another office (Especially office of disaster assistance processes and procedures, or for the agency as a whole outside of existing guidance.)
* Tell you what lender to use or endorse any particular lender over another. I also can’t solve or answer most questions about why a particular lender is doing x,y,z.
* Share anything that hasn’t been cleared for release.

Pretty much all of these questions I’m going to refer to my government-assigned work-from-home Bureaucat [Nina Zoobie Halloumi](https://i.imgur.com/rMVVJ2a.jpg).

The moderators sent me a list of questions consolidated by the community. I’m joined today with a field representative for the Office of Disaster Assistance West Bill Koontz and another district representative in DC David Hincapie. All three of us are field staff, so that means that we work with the public regularly, but also that we’re not policy makers.

We’re going to start this off by doing our best to answer the questions consolidated yesterday:

———————————————————————————————————————————————-

#**Program Organization**

###* *Which programs does SBA oversee and where can we get information about ALL of them, including the less known ones?*

We release a [national resource guide](https://www.sba.gov/sites/default/files/files/resourceguide_national.pdf) that provides an overview of all of our programs. That resource guide doesn’t include the PPP or the EIDL advance, since these were just added a few weeks ago. There are ~20-30 programs for business owners through the SBA. They fit into 4 different areas:

| Disaster | Contracting | Counseling |Financing |
|:———-:|:———–:|:————:|:———:|
|Disaster Physical damage Loans|8(a) certification program – qualifying businesses to sole source contracts and more|Small Business Development Centers|7(a) (with about 30 different flavors) – working capital loans|
|Economic Injury|Women Owned Small Business Certification|Women’s Business Centers|504 – commercial real estate loans|
|PPP loan (new)|Veteran Owned Small Business Certification|Veteran’s Business Development Centers|Microloans|
|Economic Injury Advance (new)|Surety Bonds|SCORE mentoring|SBIR seed grants for new products|
||HubZones|Procurement Assistance Centers|SBIC – equity/venture funding|
|||Export assistance Centers|

###* *What is the specific role of the SBA vs. the banks?*

This is a complicated question. The short answer is that it depends on the program. For our larger lending programs, SBA operates essentially as an insurer for loans that are made in accordance with our policies (If a lender agrees to follow our guidelines for a business loan, we will “guarantee” it – meaning that we will pay for a portion of the losses should that loan go bad.) Borrowers pay a packaging fee for our normal guaranteed loans and these fees offset any of the losses in normal times, not taxpayer dollars.

###* *Why do the guidelines the SBA is implementing seem to be different from what was described in the law authorizing the programs?*

At a high and very general level I can say that laws and procedures/rules are two different things. The latter will always be more specific and can’t conflict with laws. For instance, [the Small Business Act](https://www.sba.gov/sites/default/files/Small%20Business%20Act_0.pdf) is a 300 page law. It rarely gets updated and needs an act of congress to do so. Our [standard operating procedures, or rules for implementing](https://www.sba.gov/sites/default/files/2019-02/SOP%2050%2010%205%28K%29%20FINAL%202.15.19%20SECURED%20copy%20paste.pdf) for just one element of that act is a 500 page document that goes through a public rulemaking process where comments and feedback must be taken and responded to. It gets updated more often than the law.

The [Bureaucat](https://i.imgur.com/2xewBHV.jpg) will answer most of the why questions, except where that reasoning was included in the interim rulemaking.

###* *Why did the SBA implement a $1k/employee cap in addition to the $10k cap? On what programs does the number of FTEs limit amounts?*

**[Bill]**To ensure that the greatest number of applicants can receive assistance. The only other area where the number of FTEs may impact a business owners are where SBA size standards might make an applicant ineligible for our programs.

#**PPP/EIDL Specifics**
##Loan Organization
###* *How do EIDL/PPP loans work together or conflict?*

1. EIDL and PPP loans can’t be used for the same expenses.

2. EIDL advances (which are forgivable) will reduce the amount of forgiveness received under the PPP. This is to avoid duplication of benefits.

3. Technically an EIDL can be rolled into a PPP. Further guidance may be coming out clarifying the process and conditions under which this can occur.

4. EIDL loans are broader in what they can be used for. PPP loans are narrower. For that reason we generally suggest that payroll costs be paid with the PPP and other business needs (rent, utilities, inventory, etc) be covered with EIDL loan funds.

###* *What is the process flow for the loan/grant programs(apply, approved by SBA, apply at a bank…) or where can we see these flows?*

The simple EIDL process flow is:

* Apply online at sba.gov –> wait –> Get your advance processed –>wait –> get your loan reviewed and decided upon

**[Bill]**The status of a specific application will be available to the applicant when processing of their EIDL is near completion. SBA will provide an email notification inviting the applicant to set up an account electronically. This account will enable applicants to check the status of their application, loan decision, loan amount, sign loan closing documents, schedule disbursement, etc. Again, we appreciate everyone’s patience while their applications are being processed.

We’re not going to delve into the details on this because these processes are getting updated and changed constantly to work better. They also haven’t been shared even with the field offices in many cases. Any information shared, even from the processing centers, would be out of date quickly or only represent a narrow perspective.

The PPP has a different process at every bank. It’s different at every institution. From an SBA perspective it’s a black box on both ends, except where we’ve made requirements in the application process (such as the [information that an application has to collect](https://www.sba.gov/sites/default/files/2020-04/PPP%20Borrower%20Application%20Form.pdf). That’s by design because SBA is not the one originating these loans.

* [complete the bank process, whatever they’ve decided to make that look like] –> Lender transmits approval to SBA and gets a loan number –>[finish the bank process, whatever they’ve decided to make that look like]

###* *Does the SBA communicate directly with the businesses seeking these loans? How can we recognize legitimate attempts to communicate with us?*

SBA won’t contact a PPP borrower directly. If someone contacts you about a PPP loan and says they’re from the SBA please report this to our Office of Inspector General. They released a special [FAQ on Scams and Frauds](https://www.sba.gov/document/report–sba-programs-scams-fraud-alerts) earlier this month. If you haven’t applied for an EIDL and you get contacted by someone from the SBA telling you about it you should suspect a scam or fraud as well. Once you’ve applied for EIDL, you may be contacted by an office of disaster assistance loan officer.

#Loans and forgiveness
###* *Which loans get forgiveness, which loans are automatic, which require proof, how can we find the restrictions? What actual guarantees are there that loans will be forgiven if the rules are followed? Will the rules still be subject to change after the loans are made?’*

Only PPP loans and EIDL advances get forgiveness. EIDL advance forgiveness is automatic. PPP forgiveness must be applied to and the details on that process have yet to be released. Questions about the future I’m delegating to the [bureaucat](https://i.imgur.com/H3JU3iM.jpg)

###* *Are there restrictions on how payrolls are paid for programs that require documentation of payment of payroll for forgiveness? (i.e. changing employee, emphasizing different operations, firing/hiring but attaining a particular payroll overall*

This question would only apply to the PPP. The answer is yes, maybe and that the detailed rules on the forgiveness portion of the PPP has yet to be released. [bureaucat](https://i.imgur.com/H0aY2QB.jpg)

###* *How does forgiveness work if business conditions change like the company is forced into bankruptcy, employees refuse to return to work or the government orders the business to be shut down for more than 8 weeks?*

1. If you take the funds out and declare bankruptcy and don’t get the forgiveness the PPP will act like any other federally funded loan.
2. If employees don’t return to work you may hire others to replace them or receive forgiveness proportionally to what you are able to spend on payroll costs (the details on how this is calculated have not yet been released). You can also return the funds that you weren’t able to use. There are no pre-payment penalties for the PPP.
3. PPP funds are expected to be paid towards payroll costs even if the business is shut down. There is no requirement that the business be in operation. Some business owners have taken the opportunity to find other work that can be done remotely for their employees, some are simply paying even though noone is working, some are having employees self-study/develop new skills. There are a lot of options here.

###* *Why are loans set up so PPP forgiveness only applies if EIDL is not used for payroll even after PPP is exhausted paying for payroll?*

1. They aren’t? You can use EIDL for payroll costs, but you should document very clearly which funds (PPP or EIDL) are going towards which pay periods. Many business owners are just keeping the two totally separate to make for cleaner and easier bookkeeping.

###* *Why can the self-employed apply for 2.5 months of income but only 8 weeks is forgivable?*

This was a decision by the administrator in consultation with the Treasury. Page 12 of the Interim Final Rule lays out the reasoning:

* “This is most consistent with the structure of the Act and its overarching focus on keeping workers paid, and will prevent windfalls that Congress did not intend.”
* ” This is because many self-employed individuals have few of the overhead expenses that qualify for forgiveness under the Act. For example, many such individuals operate out of either their homes, vehicles, or sheds and thus do not incur qualifying mortgage interest, rent, or utility payments. As a result, most of their receipts will constitute net income. Allowing such a self employed individual to treat the full amount of a PPP loan as net income would result in a windfall.”

#Obtaining approvals
### * *Why are different banks requiring different documentation between what financial companies require for documentation?*

The short answer is because they have the discretion to do so. Every lender needs to exercise due diligence and make an effort to verify payroll costs. Among 5,000+ lenders you’re going to see the full spectrum of approaches here.

###* *How much does creditworthiness or credit score matter for these loans?*

PPP: Depends on the lender.
EIDL: It is a factor.

###* *What happens if multiple applications (in good faith) are submitted to multiple lenders?*

SBA’s loan system will only allow for a single application to be submitted on behalf of a borrower. The first borrower to submit will lock-out all other submitters. I’ve dealt with a number of business owners who pursued this strategy. There are upsides and downsides.

###* *Is all hope lost if an application for EIDL rejected for errors? Do they just get stuck?*

[ODA response needed]

#Loan status
###* *Where can businesses go to find their status with the SBA (i.e. confirmation numbers, status, etc)?*

For the PPP, they need to go to their lender. We can only see if an approval exists. For the EIDL they need to go to the 1-800 number. ((800) 659-2955)

###* Do you have any information about the order of EIDL grant processing?

**[Bill]**We are processing disaster loan applications and Advances on a first-come, first serve basis as fast as we can.

###* *If someone has an approval number but their bank does not act what options do they have besides waiting?*

Banks were instructed that the expectation for PPP is that they disburse funds within 10 calendar days from approval. SBA has the authority to cancel an approval if that hasn’t happened. That’s a punishment to the lender though. We can’t force a lender to disburse their own funds to an applicant.

###* *Can SBA loan confirmation numbers be transferred away from lenders who are failing to fund in a timely way?*

No.

###* *Do the confirmation numbers have a structure (region, number in line, etc)?*

I’d advise against numerology. I’m not aware of a specific structure with much meaningful information and Application numbers are assigned as applications are received.

#SBA Structure

###* *What are tiers 1, 2, and 3 on the SBA helpline and what questions can they each answer?*

**[Bill]** Our customer call center has not provided ODA field office staff members any information about Tiers 1, 2 or 3. As with any operation, there are supervisors in the call center with oversight responsibility and more authority than others.

###* *Within the SBA, what is the role of the ODA (Office of Disaster Assistance)? What sub-organizations should we be aware of relating to this pandemic?*

**[Bill]** The Office of Disaster Assistance’s mission is to provide low interest disaster loans to businesses of all sizes, private non-profit organizations, homeowners, and renters to repair or replace real estate, personal property, machinery & equipment, inventory and business assets that have been damaged or destroyed in a declared disaster. ODA has their own field offices, but not sub-organizations.

###* *Does the SBA outsource operations? Which ones and to whom?*

**[Bill]**Normally, no. For the COVID19 response, SBA’s ODA established a public/private relationship with an unnamed outside vendor to process COVID19 loans.

#Communication
###* *How can we best recognize solicitation attempts by financial firms without proper affiliation to the SBA or access to the programs?*

There are a few resources:
1. Check the [Find a Lender](https://www.sba.gov/paycheckprotection/find) tool if they have a physical location near you
2. Ask your local SBA district office
3. See if their name showed up on this [list](https://www.sba.gov/sites/default/files/2020-04/Lenders%20participating%20in%20PPP%20by%20State_As%20of%2004%2023%2020.pdf) of institutions that made loans in Phase 1.

This can be legitimately difficult overall though because there are sometimes intermediaries that authorized lenders will allow to package loan applications for them. If a website has a “banking partners” section on their website they’re usually an intermediary or a packager. You can do detective work using tools put out by the [Treasury](https://www.helpwithmybank.gov/national-banks/national-banks.html). A regulated bank will always have that information in the footer of their website with a number that you can independently verify at their regulator’s website. For intermediaries, you just have to go off of reviews online.

###* *Customer service reps have been giving out unhelpful or confusing information. What processes are being put in place to make sure they can give us the accurate information we need?*

**[Bill]**Our field office staff are sharing any reports we receive of unhelpful or confusing comments made by employees in SBA’s call centers. SBA will release any customer service representative who is unable to properly perform their job.

###* *Outside of SBA.gov, what are the routes the SBA uses to talk to us? Where can we see a daily or weekly briefing?*

Folks can sign up for national updates [here](https://www.sba.gov/updates), or also sign up directly for smaller, more specific email distribution lists [here](https://public.govdelivery.com/accounts/USSBA/subscriber/new). You can also view our [events page](https://www.sba.gov/events/find/?dateRange=all&distance=200&pageNumber=1), where local offices and our non-profit partners are holding hundreds of webinars on a variety of topics every month.

###* *How can we see the total amount of loans made?*

Check our [Freedom of Information](https://www.sba.gov/about-sba/open-government/foia#section-header-32) page. New reports and data get published there.

###* *What communications should small businesses expect as they go through the process, including about errors, denials, progress or acceptance? (Might be integrated with another question)*

**[Bill]** The status of individual applications will be available to the applicant when processing of their EIDL is near completion. SBA will provide an email notification inviting the applicant to set up an account electronically. This account will enable applicants to check the status of their application, loan decision, loan amount, sign loan closing documents, schedule disbursement, etc. Again, we appreciate everyone’s patience while their applications are being processed. Regarding files that are suspended or delayed due to errors or denials, our field office staff have not yet been informed how files in this category are being handled or when to expect resolutions.

#Public Relations
###* *What does the SBA think of the job they have been doing so far?*

[bureaucat](https://i.imgur.com/8jadLD5.jpg)

That’s a response I’ll leave to our [national press release](https://www.sba.gov/about-sba/sba-newsroom/press-releases-media-advisories/statement-secretary-steven-t-mnuchin-and-administrator-jovita-carranza-success-paycheck-protection). SBA isn’t one thing.

###* *Which businesses or industries does the SBA think need help most? Does size (smaller than “small”) matter?*

SBA exists to help all small businesses. Some industries are much more represented than others (there are just more food service and construction firms than clog manufacturers out there.)

The [federal definitions of “small”](https://www.sba.gov/federal-contracting/contracting-guide/size-standards) are often contentious, but the SBA definitions are often pointed to as more comprehensive definitions because we make an attempt to create a different definition for every single industry. You can use [this tool](https://www.sba.gov/size-standards/) or look at the table at the bottom of [this page](https://www.sba.gov/document/support–table-size-standards). The standards are designed to be broadly inclusive and for most of our programs are not the sole item used to determine eligibility.

My experience is that for our regular lending and counselling programs, business owners usually grow out of them before they become ineligible(they hire their own consultants or find they can get better terms than an SBA loan.) I don’t work as much on the contracting side of things, but I think the size standards are more frequently needing to be evaluated in those programs.

###* *What are the most common questions you have been answering?*

* Status updates of course make up about 40% of my day. That’s a hard question because our local office isn’t in a position to help most of the time.

* Not so much a question, but I spend a lot of time clarifying misinformation. I.E. “the bank says SBA rejected me” or “why does SBA require my bank do X.”

* Also not a question, but I spend a lot of time collecting stories. Even in non-disaster times business owners love to talk about their business because its what they’re passionate about and they’ve almost always invested an incredible amount of blood, sweat, and tears into their businesses. A lot of folks just want to share, and our office listens. Oftentimes I hear their stories and I know a local non-profit or resource that specializes in serving that need. We don’t do much for instance with legal advice, lease or rental agreements, but I am getting a **lot** of questions about how to manage relationships and agreements with commercial landlords right now.

# Additional questions
###* *Are there limitations on funding foreign owned but otherwise US companies built into the programs?*

For the PPP technically the program can accept these applications so long as the business is a US operated business. It is overall more difficult to document and submit these in a way that is acceptable to SBA systems though. A lender has to be willing to slow down and work closely with the borrower and SBA to get it submitted. For all of the other SBA programs, a business needs to be majority owned by a US citizen or legal permanent resident to qualify.

###* *Some applications made 3/29 and 3/30 seem to be stuck in credit pull. Is there any plan for these? (Might be integrated with another question)*

**[Bill]**We in the field offices have not yet been informed specifically how these files will be handled, or when. Any business that applied for a Coronavirus (COVID-19) SBA Economic Injury Disaster Loan (EIDL) prior to the release of SBA’s new streamlined application the week ending March 29, must reapply using SBA’s streamlined online application (in SBA’s new loan processing system) available at www.sba.gov. If a business doesn’t have an application number or received one that begins with a “2”, they must reapply under SBA’s new processing system. SBA is presently contacting everyone who applied through the old system, and asking them to reapply at https://covid19relief.sba.gov/ when applications re-open. If a business owner has an application or conformation number that begins with a “3”, they don’t need to do anything – their application is in process in the new system.

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We are field staff at the SBA, ask us [almost] anything.

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