[drsooch]

I created an Account just for this thread.

I spent time working as a Credit Analyst for an Economic Development Firm (AKA we made SBA 504 loans). I would like to note I am no longer in the industry, however I do have contacts still. I've spent some time on the phone discussing the program with current lenders.

The SBA does not just hand out money with no strings attached. The actual 504 loan program (general small business loans) have strict requirements that are adhered too. There are size constraints, business type constraints etc. and (some of) these constraints extend to the PPP. I can't say for certain but it is entirely possible this firm doesn't qualify.

As for the PPP, I believe the max loan amount is 2.5x monthly payroll. I can imagine that 200M burn rate is not purely salary. But safe to say they can apply for a maximum 500M. Is that an exorbitant amount of money for a firm with no revenue? Probably.

But in talks with those in the industry, the main concern is Construction Companies. In the markets I'm in, construction is still underway, so these companies are applying for PPP while still maintaining a constant revenue stream. They are essentially getting free employees for 2.5 months, while still being relatively unaffected. That will most likely change if the economy enters a larger downturn as construction is usually the first to go.

[LeoTinnitus]

I worked in the commercial department of a state financial institution and I loathed SBA loans. They were such a pain. Everybody hated them. Lenders, processors, underwriters...but not the VP!

I mean I get but ffs why? Let the big companies do it. They're just a hassle.

[drsooch]

They're a hassle, but less risk for the primary lender. We worked with primarily smaller Banks, it makes sense for a small bank to work with the program.

[LeoTinnitus]

Yeah but most small banks don't have any understanding of what it all requires. It's not like an inhouse loan where if the borrower misses a payment they just show up on a report. You gotta jump though hoops and notify tons of stuff to the SBA about it. Not to mention everything needing to be perfect.

[toomuchtodo]

Thank you for taking the time to contribute this.