SBA Lenders: What steps are you taking with your borrowers?

by a searcher from University of Virginia-McIntire - McIntire School of Commerce

4 years ago

This is a great community and there are a lot of thought leaders who post here on a regular basis. Obviously the situation is very fluid at the moment but what steps are SBA lenders taking with their borrowers during this difficult time?

What legislation has been passed / proposed?
What relief are you providing (interest only / suspending P&I)?
Where should borrowers go for questions?
What advice do you have for people who are at or near closing?

The SBA and its preferred lenders are going to be a critical part of the country's recovery in the months and years to come. We appreciate your hard work during this difficult time

7 likes
191 views
3 comments

lender from University of Missouri - Columbia

First and foremost, any banker should be talking to their existing customer base daily with details on programs the SBA has coming out as well as bank programs to help their borrowers.. Lenders hopefully sent the details on the SBA emergency program to their customers early in the process. I would prepare everyone that is currently processing an acquisition to bake into their analysis that things could change dramatically over the next days/weeks/months as banks access what is happening to their customer base. We as banks have yet to truly process the amount of pain that is coming and I think it would be prudent for anyone buying a business to understand that. Proposed legislation that should come out next week that could (nothing is approved yet) help in acquisitions with waiving guarantee fees and giving a higher guarantee (90% for banks). Everyone is still digesting this but I don't think this will be business as usual in the coming weeks. Glass half full: acquisitions could become a silver lining as a way for banks to put income on without a lot of risk based on the SBA guarantees. However, a lot of the businesses you are contemplating buying are getting absolutely crushed right now. Pay attention to the short term; do you have backup liquidity; what is happening to the employees and customer base of the company you are looking to buy; supply chain issues, etc? Lastly, this would be a good time to look at every bank holistically rather than just as an SBA lender. Bank stocks, like everyone, have been hit hard the last couple of weeks and will likely continue to be stung as we defer payments and see decreases in revenue as a result. Diversified banks with multiple revenue streams should have access to income to keep moving forward.

4 years ago | like reply | 4 likes

lender from Marquette University - College of Business Administration & Graduate School of Management

The bank I work for (Bank of George) implemented 90 day deferrals for all borrowers, conventional and SBA, and will be evaluating needs beyond that on a case by case basis. On deals in progress, we are working with borrowers to make sure there is enough working capital to withstand any prolonged disruption. It’s better to be proactive in turbulent times. Some borrowers are waiting to close until things stabilize. I think it’s important to have open communication with seller, lender, and other advisors to determine the best path. We are actively lending, and hopeful things will stabilize soon.

4 years ago | like reply | 1 like

More on Searchfunder

Just Closed on My First Deal! Reflections and Takeaways for other Searchers

45,152 transactions are available on Searchfunder (now searchable by keyword)

Now everyone has unlimited IBISWorld access

Family office looking for traditional searchers

Examples of self-funded searcher websites

Investor seeking Self-Funded Search Deals

What are market terms for Seller Notes?

2 Best Ways To Find Motivated Sellers, Off-Market Deals

Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.

We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.