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See the latest news and updates about COVID-19 and its impact on the Charlotte region, the Carolinas and beyond.

NC Small Business Administration Director Discusses Paycheck Protection Program Loans

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Small business owners hoping to tap federal loans must act quickly and overcome hurdles.

The clock is ticking for many small businesses hoping to stay afloat through COVID-19 shutdowns. Banks have received hundreds of thousands of applications to tap $349 billion set aside by stimulus bills. And the program was only launched Friday. If used mostly to retain workers or rehire them, those loans don't have to be paid back. The program is managed by the Small Business Administration. Thomas Stith III is the SBA director for North Carolina.

Lisa Worf: Good morning, Mr. Stith.

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Thomas Stith III

Thomas Stith: Good morning, Lisa.

Worf: How much can businesses get and how fast will they get their money?

Stith: Well, the Paycheck Protection Program loans are a maximum of $10 million for a period of two years with a 1% interest. Lisa, as you correctly pointed out, there is an incentive within the Paycheck Protection Program loan that if a small business utilizes those loan proceeds for payroll, the eight weeks post receiving the loan, any loan proceeds utilized for payroll, rent, utilities, mortgage payment -- that amount will be forgiven from the total loan amount.

If you utilize at least 75% of those proceeds for payrolls during that first eight-week period, the other 25% can go to those other allowable uses. That total amount will be forgiven. And it could really mitigate the overall amount of the loan.

Worf: And of course, it depends largely on what your payroll is, what you can receive then. So how fast are people going to be able to get their money once they're able to apply?

Stith: For the Paycheck Protection Program, obviously SBA, in conjunction with the Treasury, is working closely with the lending communities to do that as quickly as possible.

Worf: So you're saying maybe within the next two weeks?

Stith: I hesitate to give a specific timeframe because we are in the early stages, but we anticipate a much shorter time period than a typical loan. The process has been significantly streamlined -- as far as documentation required, the application itself. So we anticipate a very efficient and timely process.

Worf: So you're saying under, then, 18 days? That would be a regular loan through you.

Stith: Right. At this point, the Economic Injury (Disaster) Loan has an estimated 18-21 days and we feel the Paycheck Protection Program will have a significantly shorter time period.

Worf: There have been a lot of bumps in the roll out of this program since it launched Friday. What do you think your office needs to make sure this goes smoothly?

Stith: I think twofold: One, providing excellent customer service to the small business community, providing communication on where things stand with the current initiative, how they can get engaged and provide them the tools and the resources.

Worf: But how do you do that when there is such a mad dash to get some of this money?

Stith: You know, I think from SBA's point of view, we have to do the same thing we counsel others: To be patient, to understand that we are operating in a climate that is a crisis. And you just have to be diligent and stay focused on serving the small business community.

Worf: Going forward, after this launch over the weekend where you had some banks saying they didn't have a key SBA document and saying SBA required documentations that the lender said wasn't necessary, how do you ensure this process is smoothed out?

Stith: I think the communication between all parties is important. We are very engaged, as I mentioned, with the lending community. We have a strong relationship, as an example, with the North Carolina Bankers Association. We've been very engaged in partnering with the Bankers Association to provide information, to hear the concerns of our lending community and ensure that we're talking internally to address those bumps in the road that have occurred. I think everyone understands with the magnitude of this initiative in the initial stages, there will be issues that will have to be addressed. But the key is to address them quickly and to continue with implementation.

Worf: What advice do you have for small businesses trying to apply for one of these loans?

Stith: I think the first step would be to talk to their current lender if they currently have a banking relationship. If they're an SBA lender, are they planning to participate in the program? It's not required that banks have to participate. But if they are an SBA lender, are they participating? And try to work with their existing lender first. We have a listing of all SBA-approved lenders in North Carolina on our office website if, in fact, a borrower needs to look at other offers. But that would be the first step. And to move forward quickly and move forward now.

Worf: Because first come, first served?

Stith: Correct.

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