SBA loans: total mess, or a business savior?

The question on many business owners’ minds as they read the headlines each day is surely, “What is going on with these SBA loans?!” Why are multibillion-dollar corporations like the Los Angeles Lakers, Ruth’s Chris, and Shake Shack receiving loans while so many small businesses are either shut out or left waiting?

Yes, it’s been a bit of a mess. However, I’ve personally seen these same loans literally save businesses from near devastation. It’s been a range of stress, experiences, and emotions for clients and banks alike.

We are all dealing with the good, the bad, and the ugly aspects of doing whatever it takes to keep employees paid and employed across the U.S. during this pandemic. So was this huge government bailout really that helpful overall?

First, let’s take a look at the good.

If your business had previously registered with the U.S. Small Business Administration (SBA), chances are you had an easier experience than most. Our clients who were already an SBA client were funded within a matter of days. For them, the Payment Protection Program (PPP) and Economic Injury Disaster Loan (EDIL) options have been a lifeline to keep their businesses moving.

More important, during this downturn, or recession, the government has been trying its absolute best to bail out the heart and soul of this country — the small business. Do you remember who was bailed out in the 2008/2009 recession? Let’s just say it wasn’t the nation’s small enterprises.

Now, the bad:

We have seen some frustration on the part of our clients when applying for these loans. The PPP loan/grant must be applied for through a bank. The client must have a previous relationship with the bank in order for the bank to accept their application (for instance, an existing business checking account).

Since the application requirements between various banks are all different, this has led to a somewhat complicated process. Some banks are asking for tax returns, while others ask for personal financial statements. The lack of uniformity can be a concern, but for the most part, the majority of our clients have not had to deal with those types of holdups.

And finally, the ugly side to this:

There is circumstantial evidence that in the initial round of the CARES Act loan process, banks were actually processing the applications of their preferred clients over the government mandated first-come-first-serve basis. Our firm has seen firsthand cases of a warped timeline in which a small business client with a complete application applies on the first day of available funding and a second large client files the same application a week or two later than the first. Who was funded sooner? You guessed it, the large client. The smaller client was left to wait for the second round of funding.

The government stimulus hasn’t been perfect, not by any means, but definitely has been a savior of many small businesses. Is it frustrating? Yes. But, is it worth it? Absolutely. We have to be grateful about living in a country that has the capability to provide this level of support for its citizens. There are other countries that didn’t even consider helping their citizens financially.

Every company deserves a fair chance to get through this crisis. Don’t hesitate to reach out to your CPA or attorney to find out how a disaster loan or the Paycheck Protection Program can directly impact your business.

If you’d like to contact the SBA directly, the disaster assistance customer service center can be reached at 1-800-659-2955 (TTY: 1-800-877-8339) or by email at disastercustomerservice@sba.gov.

Cesar Ravan, CPA, is managing partner at Ravan + Blanco, a certified public accounting and business advisors firm. www.ravanandco.com.

▪ This opinion column was written for Business Mondoay, the business magazine of the Miami Herald.

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This story was originally published May 23, 2020 at 7:00 AM with the headline "SBA loans: total mess, or a business savior?."