Dream Maker Podcast
Dream Maker Podcast
SBA, PPP, & EIDL Oh My! -Brandon Mumgaard
Brandon Mumgaard joins Chris Floyd to talk about the SBA and PPP loan process, as well as other tools, businesses have or can use to manage their way through the unknowns of the last several months.
Welcome to dream maker. A podcast brought to you by first national bank of Syracuse at F and B. We strive to make sure that every life we touch is improved. Join us for each episode. As we cover a wide range of topics from financial wellness and marketing to mental health and ways to enjoy life, we're all we may even teach you a thing or two about cultivating healthy soil. We are here to improve your life. And so glad you've joined us today. Now, here are your host for today's episode of dream maker.
Speaker 2:Well, Hey, everybody, welcome to week. Number two of our DreamMaker podcast. And this week I have Brandon mum guard. Brandon works in our garden city branch, and, uh, is really known to be our business SBA specialist. So we thought we'd take some time talk about the SBA programs and, and, uh, what all, what we have done so far since the whole, uh, pandemic deal started and what, uh, what we look forward to going, doing, going forward and who all, who else knows what we'll run into. So, first of all, Brandon, I didn't warn about this. I just think about that, but, you know, can you give us a little bit of background and how you got to first national?
Speaker 3:Yeah, so I actually, I moved here from Omaha, Nebraska. Um, so I'm married and my wife is from garden city originally, and I'm a university Nebraska graduate. So go Huskers. And we moved up to Omaha after graduation. And I was working in the commercial department as a credit analyst for Wells Fargo and my wife was pregnant and our lease was coming up on our house that we were renting and we were deciding if we wanted to buy, or we had been and flirting with the idea of moving to her hometown of garden city. And at that point she had convinced me and really, you know, stated that if we can, uh, find jobs similar to what we were doing in Omaha, that I'd be open for it. And sure enough, I found first national bank was hiring for a analyst. I applied and here we are five years later.
Speaker 2:Yeah. I was kind of joking. We have to always have, uh, I guess we're equal opportunity employer. Right? We can take Nebraska people as well.
Speaker 3:I knew that was gonna come in there somewhere.
Speaker 2:Yeah. We like all kinds of people here at first. So, um, you know, one of the things I really appreciate about Brandon is like, boy, when this PPP stuff hit, um, he just was, uh, really did really job just figuring out the program. And it was so deal, but what was that like, Brandon? I mean, um, you know, it was chaotic to say the least, but what was that like, just going through and trying to figure all that out?
Speaker 3:Oh man, it was, uh, it was a whirlwind. It was stressful. You know, I've, I've been in my working career since graduating college for, you know, 10 years roughly, and it's probably the busiest and most overwhelmed, I felt at the same time and just the lack of, of, uh, rules and the, the lack of guidance that was provided to the lending institutions didn't help anything out. So, you know, we were real, really notified about the PPP program when it passed through, um, Congress and trying to ramp up for it and trying to get a game plan in place. You know, we realize it's really hard to get a game plan in place when you have no idea what the rules are or how you're supposed to take applications or what's required. And then to make things even better. I believe the treasury stated that they were gonna begin accepting applications on Friday, April oh seventh. I wanna say it was, I could be wrong seventh or eighth, and we're sitting there on, uh, the day before on that Thursday, trying to figure out, you know, how we're gonna be doing this because still SBA hadn't released any guidance to the, the banks. And then about, I wanna say 11 o'clock Thursday night, they came out with the rules. I think, you know, I did. And I, I know Chris, you probably did kind of stayed up and read through their interim final rule and tried to tried to analyze it and figure out exactly what we knew he did, but you know, of course it was very broad and it was not very specific. And so we come to work on Friday morning and before eight o'clock even hit, I, you know, our phones were ringing, people were won, the apply were sending us applications, asking us a hundred questions about what they needed, what they're supposed to do. And at this point we still don't have all the answers. And we're just trying to communicate our interpretation of the rules to the best of our ability. And boy, it was that first day was chaotic. Um, and you know, SBAs website crashed that first day. And so we're sitting there with long load times, um, answering phone calls, the applications are piling up. I think we ended up leaving the bank about nine o'clock on Friday night. I wanna say. And there's a handful of us that took our computers home for the weekend and more or less that's all we did throughout the whole first, first and second weekends were, sounds like a lot of fun to everybody probably listening to this is, but, you know, taking those applications and, and processing it and getting back with the customers, letting them know that they've been approved, um, you know, that their funds are delegated. That was another issue. Was the D the talk and discussion of how long is that money gonna last for? Um, so everybody was wanting to get it in first day, second day, right away. So least it, it was, it was a difficult time. It was stressful, but it was also, um, you know, I, I know a lot more about payroll documentation and payroll, IRS tax forms that I, than I ever cared to know, but it, it was a, it was an interesting time.
Speaker 2:Yeah. I think that's the part I was thinking, as you were saying, that is I, that I ever cared to know about payroll forms. Wow. And, uh, cuz I, you know, I'm kinda like you, I got all kinds of phone calls. I remember 30 Thursday night. Um, can't remember I was driving, I was going across the country somewhere and had guys call me and was like, Hey, how fast they'd be about of money before eight in the mornings? Like, ah, I don't think so.<laugh>, you know, but you know, I think, you know, if everybody, you know, it's such a stressful time, then they think, well, we got this lifeline here and then, you know, it was, um, they were tough and it's kind of hard to imagine, you know, um, 300 billion. How far will that stretch? Mm-hmm<affirmative> fairly fast too, I guess
Speaker 3:You would say
Speaker 2:At
Speaker 3:Two or so it lasted for the first, first, um, tranche money, I want say.
Speaker 2:Yeah. I mean it kinda
Speaker 3:10 days, I don't know,
Speaker 2:Um, which like said that website was something else and you know, to their credit, I mean, it wasn't really designed to have however many banks jump in. So
Speaker 3:Yeah, I, I actually saw the stat that the SBA pro more than 14 years worth of loans in the first 14 days.
Speaker 2:Wow. Yeah. And that's, you know, and, and like you mentioned, it was, you know, the hard parts of rules and all that stuff and, and uh, but you think, you know, it was probably the easiest way for the government to get 600 some billion out into businesses, hands, you know, that's, um, boy, it was kinda, and it's kind of joke about an interim final rule. I don't know how many, I don't think count we've had of those. Um, it seems like anyone, I dunno if we ever get a final, final rule or not,
Speaker 3:I don't think we'll see one.
Speaker 2:Yeah, probably not.
Speaker 3:Yeah.
Speaker 2:Um, so what do you, you know, the stress of it, and I know it was kind of tough for everybody and, and especially, you know, anymore with websites and, you know, everything, you know, a lot of programs we use the banker almost, uh, what do you call it? Subscription the service type websites where you just click and it goes, and, and, uh, but man, I tell you what I remember working some Eick and wait and
Speaker 3:Mm-hmm
Speaker 2:<affirmative> uh, how long did it, like some of those first applications, how long did it take to really get them through?
Speaker 3:Oh, uh, you know, I would say the, some of the first ones were taken an hour, at least. Um, and the reason is, is, you know, the application process. So SBA uses a system called Eran and, you know, it's a fairly simple process. They take you through step by step, you enter in your loan request. You, you say it's for a PPP loan and the terms and, you know, everything was already preset given the, the terms that SBA and the treasury had announced for the PPP. And so it's really a streamlined, uh, version of an SBA loan, but with all the volume and traffic that the website was having that, you know, in order you, you would fill out one page and hit submit, and you'd be waiting there for, I mean, you could be waiting there for 15, 20 minutes and then it would give you an air message basically saying, try again. And then, you know, if you got through, then you go to the next page and you spend 30 seconds filling out information on that page. And then you have to wait another 15 or 20 minutes, and then you, it might give you that same error saying, you know, sorry, you have to start over. So, I mean, it was frustrating. We, we had somewhere, you know, we would, we would get these little periods where we'd be able to get, you know, five to 10 applications per processed without having any issues. And then we'd run into periods where, you know, we couldn't do anything for half of a day just because I'm assuming the volume was crashing the website with all the different banks and financial institutions around the country submitting or trying to submit their applications.
Speaker 2:Yeah. So like, uh, just to give an example, like how fast could you do one when it was working as fast as it could? I mean,
Speaker 3:Uh, you could probably get one done in seven to 10 minutes.
Speaker 2:Yeah. So that's a big difference, right? An hour to seven.
Speaker 3:Yeah. Oh yeah. I mean, there, like I said, there are, there are, so that would, you know, you'd have to do it multiple times and it would, it would take well over an hour. So just the, uh, really the uncertainty of knowing if you're gonna run into that problem or not, but just having to kinda keep, keep trying and keep going and keep trying to push through it.
Speaker 2:Yeah. It's just, yeah, it was, it was amazing that out that system did that. And I don't know, and, and really too, the, you know, the lot of banks and we were kind of fortunate, I guess we were already set up, you know, as a preferred lender through SBA, we set up through the Eran system, but you know, that was a struggle for some banks even to get signed up. You like, if you weren't signed up, when, you know, when those banks actually got hooked on the system or,
Speaker 3:Uh, well, they, there were some banks that were getting, getting, um, their SBA registrations that same day that they opened up for applications and, you know, a lot of, a lot of, uh, local banks around our area. They, you know, there's some that aren't SBA registered lenders. And so they were actually referring their customers over to us to help process their P P P PPP loans, which was kind of interesting hearing that, you know, Hey, my bank across the street said to give you guys a call for the PPP loan. And so not only where we working with our normal customers that we already have, but we were having people refer to us, which really added to the, the amount of applications that kept piling up.
Speaker 2:Yeah. Yeah. And that's, uh, and that was kinda, I think you've heard stories about other banks kinda getting a pinch, especially the big banks. I think really, because, you know, they basically said, if you're not a customer we're not dealing with it. And, you know, you can under a little bit kind of understand that cuz you know, but, and then sometimes there, there may be, you know, kind of the backwards pressure of like, well, how come you didn't treat somebody fairly and, or, you know, equal time. So that was kind of a real stressful too, to kind of, you know, how do you make take care of the customers you've been working with for who knows how many years, and then, you know, and take care of those new ones too at the same time was kind a,
Speaker 3:Every customer's business is different. So, you know, the customers that we have relationships with already, it kind of gave us a good head start as far as, you know, helping fill out the application, but then we'd have these other customers that we've never done any business with. And they, they were a little bit more cumbersome as far as the, uh, the rules that SBA was implementing and information that for, you know, uh, an existing customer you would already have, but for a new, new customer, you still have to get, um, in order to process the application. So it kind of drug on for a little while, but you know, I think, I think all the business owners out there, um, and so proprietors, they understood kind of the situation, um, that banks were in and they, you know, in, you might ask'em for 10 or 12 different things or items, and they were always, you know, on top of getting it. And so I think they really understood and that made the process a little bit easier. Uh, just, just how the business owners were understanding of the situation. Um, so that, you know, we, I know we were all here at our bank were all really appreciative of our customers and our non-customers really understanding kinda the difficulties we had throughout the, throughout the process.
Speaker 2:Yeah. And I think, you know, the, this is, you know, every business was a little bit different cuz you know, some of the businesses are really a little more needing the money right then versus others. And um, you know, and I, I think like you is like really appreciative how those customers were understanding that, you know, we're doing our best cuz it was a lot of loans that went through and
Speaker 3:Yeah.
Speaker 2:Kinda a short amount of time. Cause I think really everybody that got the apps in early, uh, we got through the first round, I'm trying to think the only ones we probably didn't were just ones that came right about right. As they were shutting off the program, if I remember right.
Speaker 3:Yep. You're right.
Speaker 2:Yeah. That was so what, uh, you know, as far as, you know, it was kind of interesting on how that program worked and you know, what they could use the money for and that's changed as we went too. So, um, how vital do you think the program was actually for helping, uh, our customers get through this?
Speaker 3:Oh, I mean, I, I don't think there's any question that if, if we did not have the P P P program, we would see a surge of this locally and nationally going outta business. Um, I mean it was absolutely vital, you know, the, all the people I've talked to, whether they're a sole proprietor with just themselves or whether they have a hundred or 200 employees, they've all said the same thing that they want to have been able to get through this, if they didn't have the P P P money. I mean, that's really what kept on afloat. Um, you know, we have restaurant owners that obviously everybody knows that restaurants close down throughout, uh, the whole COVID for an extended period of time. Um, we have individuals that own hotels or just various retail businesses that were closed or just were considered ENT. And, but, you know, they had to keep their employees on staff and, you know, if they were to let go of their employees and then reopen, they'd have to go through the training process. Again, granted, if they didn't have any of the same employees come back and just being able to keep, uh, keep all of their employees staffed for the most part was huge. But then also the big picture with, you know, our local economy here in, in Southwest Kansas, just having that money remaining in the economy. I mean, it, there's no question in my mind how, how vital it was to, you know, maintain a sense of normalcy, um, when everything was kind of going all outta whack<affirmative>
Speaker 2:Yeah, it's really hard to imagine, you know, well, it's almost like you're driving a car down the road, 60 mile an hour, run your business and you just ride into the, uh, in cement embankment and all stop like that. You know, it's just hard to stop damage of what's doing that business. So yeah, I think you're right. It's just was critical to those guys to able to keep going and, and um, you know, and a lot of it too, seems like, I don't know what you think about this, but like just the confidence, um, you know, its I think human nature to get a little spooked and you know, probably all of us went through different periods where like what the heck is going to happen. And, and sometimes you're not careful you can go off and thinking a, who knows, you know, the world's gonna end or whatnot and you know, of course it didn't, it kinda sun comes up tomorrow, but mm-hmm<affirmative> uh, man, I think some of that stuff's just critical. Just keeping confidence too and people and you know, in the community and thing like that. So
Speaker 3:Yeah. Yes.
Speaker 2:So what, uh, you know, of course, you know, all the people you've been visiting with, um, what do you think people's mindset is now as far as, you know, the kinda starting to open and things like that or, you know, what are some key things, do you think they're, uh, helping some of those, uh, businesses kinda get back going again?
Speaker 3:Uh, you know, some of the stuff that the PPP helped out with, you know, whether it was payroll or rent utilities, um, helping make, make term interest payments, you know, now that everything's starting to open back up, you know, they're kind of in a similar position, they, they were just with some restric that they didn't have beforehand. And so, you know, I think that, like you said, just a second ago, was their confidence is there because if they didn't have this money, then they'd really be struggling to find their footing. Um, you know, not, everything's not back to normal. You got this second surge is what everybody's saying going on. And you know, here, here, locally things kind of are, are maintaining some sort of normalcy. You know, we got restaurants are open, retail stores are open. Um, there's really no restrictions going on other than, you know, recommendations to where facial masks. But know, I, I just think that, I think there's still uncertainty out there. Um, just from the, the business owners I've talked to, you know, things aren't normal by any means right now. And you know, there's, there's talks about additional stimulus plans coming out in the near future and you know, a lot of different business owners I've talked to, you know, really, especially the, our ag customers, whether they're, um, you know, farmers or ranchers, you know, you got the other program with the C F a, um, and then SBA also had their idle programs. Those really help them limp along. But then there's, I feel like there's still a lot of uncertainty kind as the general consensus this, but you know, it really, I mean, it just goes back to how vital this was like really, if this PPP and I, and these disaster loans weren't put in place, it would be a, it would be a completely different picture than what we're seeing now. And I, I truly believe that
Speaker 2:You, uh, I can't remember, you know, I won't get the exact numbers. Right. But, um, you know, I remember one deal talking about how the system was, uh, how much money got pumped into the system. So fast compared to, you know, they did in about six weeks between, uh, Congress and the federal reserve, you know, I think what took like two or three years to do back in oh 8 0 9, as far as stimulus. And mm-hmm,<affirmative>, you know, things that he did, you know, bring confidence to the economy. So, yeah. Um, you know, it's kinda amazing when you think about it, that, how, what it, you know, it could have been a lot worse. Let's put it that way, but yeah. Um, one of the things you mentioned in, in, um, I know a lot of people, sometimes you get, uh, acronyms and things like that, they can try to figure out, well, what does that mean? You mentioned idle, um, which I believe is, uh, the emergency economic. Oh my gosh. I economic
Speaker 3:Injury, disaster loan,
Speaker 2:Disaster loan. Yeah. Um, any of we've had several customers, uh, apply for those. And of course that deal's kind of changed as we've went a little bit, uh, from when the program opened up. Cause, uh, how's the best way or how does that work exactly. For our customers?
Speaker 3:Yeah. So, uh, the economic injury disaster loans or the acronym is ID E I D L those are disaster loans that SBA typically has in place. Um, but they refined and kind of revamp them to be strictly for the COVID situation and pandemic that we were going through, but really how that works is, uh, a company would go on to SBAs website and there's a link on there, apply for a disaster loan. And at first the rules were, and you kind of alluded to it is they've changed, not as much as the PVP, but they've changed pretty often. But at first, you know, it was companies were eligible for up to six months of working capital, um, as a loan. And so this loan would actually be, have a 30 year maturity. And for the first 12 months, there were no payments that were due. And then starting a month 13, it would be monthly principal and interest payments based on a 30 year maturity, um, interest rate for a, for profit business was three point or is 3.75. And for a nonprofit business, which typically nonprofits can't apply for SBA related loans. So it was kind of unique that they were included, but nonprofits were 2.7, 5%, so real, real cheap rates. Um, but really they can do for six months worth of working capital. And so how they calculated that was they took your gross profit, uh, divided it by six and then, or excuse me, divided it by 12 to determine your monthly gross profit. And then they multiplied it sick by six to get to six months worth. And that's what you were eligible up to. Um, now I didn't see any, any idle loans, at least in our bank that got approved that were any higher than 500,000. So we had, we had a handful of, of businesses that received, they all received 500,000, even though their, their qualified maximum amount would have been more than that. And so I believe that SBA was probably limiting the, uh, the loans to 500,000. Um, but then they had that open, full, I can't remember how long it was to, it was mainly commercial businesses, but then they opened it up to agricultural entities. And so for about a good month there or so, um, commercial businesses were not allowed to apply or they weren't accepting applications for them. And they were strictly focusing on ag, um, on the ag industry. And so, you know, we had a lot of farmers and ranchers out here that applied and, you know, they were receiving about$150,000, I think was the maximum I saw. And then here recently within the past three weeks, I wanna say they opened it back up to where, correct me if I'm wrong, Chris, but I think they're accepting both ads and commercial right now. Um, so you know, the, the commercial customers that weren't able to, to get applied within the timeframe before they shut it down to, and restrict it to ag, they're now able to go back in there and apply. Um, and I actually, I was, as I was walking into, uh, record this podcast with you, I heard one of our other lenders here in the office said that we had a, a, that applied for his I loan. I believe it was yesterday at 3:00 PM. And he was signing his loan documents for, to get the day or so it's, uh, it seems to be as though they've streamlined that and are really getting the money out fast.
Speaker 2:Yeah. Cause you know, I think the first ones, it was really quite a while I think right before, you know, when they applied to when they actually mm-hmm,<affirmative>, you know,
Speaker 3:I had a customer of mine, he applied, I wanna say it was the day they opened up. He had his application put in and you know, they were doing, um,$10,000 advances. They would ask you on the application, if you would like a$10,000 advance, I think it was a forgivable advance put in your bank account until they processed your full application. So you'd say yes. And the theory was that they would have that advance into your account. I think within the next five days. And you know, it was two, three weeks later, he hadn't seen anything. And then all of a sudden, one day it was about a month later, he had a$10,000 advance show up into his bank account by the S B a and then it was about another day or two later, he received an email that he was approved for the idle loan. And he just had to go in there and review the loan documents. You electronically sign them. And then he had his money show up in his account. Uh, it was about two or three days later, I wanna say.
Speaker 2:So really pretty it's really sped up the process than had as far as I, you know, I guess assuming they hired more people or something figured out they kinda got it running a lot faster, I imagine. But
Speaker 3:Yeah, you know, I had, uh, we have contacts in the Wichita district office that were telling us that they were essentially pulled off their normal duties, um, or their normal daily duties and basically were reassigned for up to 30 days of just strictly processing ID loans. And so I think for, from my understanding, the SBA, um, took, took their existing employees and I'm sure they hired new employees or did whatever they had to do, but then reassigned them to strictly process auto loans. So in that way, we'd be able to get the money out a little bit faster than normal.
Speaker 2:And it's really like, so say you're listening to this in your business and you haven't done that. What type of thing, what information do you need to grab to go fill it out on the website?
Speaker 3:You know, if you have your 2019 tax return or your 2019 profit loss, if you haven't filed your tax return, really that's going to be mainly the only, only document that you need, um, you know, for the PPP and everything, it, it was a little bit different. You needed a lot more documentation for the ID loan. It, it almost seemed like it was a little too easy of a, uh, too easy of a process. I, I actually had a customer, I helped fill out the application and really just told you to grab your tax return or your income statement. And you go through and you put in the calculations as far as, you know, what your gross revenues were, your cost of good solds. And basically it says, this is your gross profit. And then it shows you right there. It it's dividing it by 12, it's multiplying it by six and saying, this is what you're eligible for. And then other than that, you just go through the process and you have to attest to, um, to certain questions saying, you know, you're, you're gonna use the money for the intended purposes and, and so forth. But it, I mean that, it was almost as simple as that. I mean, you, I would highly recommend if there there's businesses out there that have not applied for the ID loan and they have any inclination in their mind that they could use it. I would go on and use it because the worst, worst thing that happens is you get approved. You let the money sit there in your account, and then three months, six months from now, you decide that, okay, I really didn't need that. Well, you can just go ahead and pay it back, you know, and there's, there's gonna be no penalty for that, but, uh, it's, it's almost like a, uh, uh, an insurance policy for the time being.
Speaker 2:Yeah, I think that's a good way to put it because, you know, um, we're all hopeful that we're on the right track. And like I said, you we're gonna have these second surges in different community as we go, I think, and, or I feel like, you know, I don't know who knows what'll happen, but, um, you know, but the, you know, it's enough uncertainty that, you know, I think it's probably is probably good for everybody to take advantage of. Um, yeah. Now I, if what levels do they, how do they, I guess, guarantee they get their money, they guess to get collateral, right. Or how do they do SBA? Doesn't do that.
Speaker 3:So the SBA, they take a, basically a, a blanket lean on, you know, accounts, receivable, inventory, um, equipment. They don't take any real estate as, and the thing is, is a lot of people were worried that, you know, I can't get, I can't get an SBA idle loan because you know, my bank or my lending institution already has a, a UCC filing on my, my working assets already. But SBA comes in and they don't require the banks to do anything. They'll just take a, a second Leann position<affirmative>, um, behind whoever is already in place. And so it's really a, uh, a unique program and a unique opportunity that a lot of people should be taking advantage of.
Speaker 2:Yeah. And it's really, I think, you know, you click through, if you go to SBAs website, sba.gov, and I think there's coronavirus resources and pretty easy to find. And I think kinda like Brandon said, I don't, there's really, yeah. Fairly easy application. So yeah, everybody really reason for anybody not to go through that
Speaker 3:SBA gov, it will take you to the page where you just the apply for assistance button and I, it walks you straight through it. And you could have your, your application filled out in 10, 15 minutes.
Speaker 2:Yeah. And it's, yeah, amazingly simple. So, and too, I guess, like you said, you've helped people, I'm sure. You know, if anybody else can go to any branch and really somebody can help them get to that process, if they have questions and yeah. Get those, some of those emails and stuff from SBA. So
Speaker 3:<laugh> about, it's probably, uh, some sort of a rural change,
Speaker 2:Right? Yep. Now, as far as the regular SBA process, how's that moving? So if somebody was just like, I need a regular SBA loan or open a new business, um, cuz you know, there are some, you know, where things like this happen, there are opportunities and mm-hmm<affirmative> people start businesses or do something different, expand their business. How's that part moving along,
Speaker 3:You know, at this point in time, I don't think it's really slowed down much. If you would've asked me, you know, while we were in the high, the P P P application process, I would've said it's probably going to be delayed. Um, if you're having the, do, do the, do the application on Eran, um, you know, luckily we're, as you know, we're a PLP lender. So we, we do enough SBA loans on an annual that basically SBA delegates us the authority to approve our own SBA loans. And basically, you know, we have to obtain and for our file, you know, the same information that we would normally, but we were able to underwrite the loan. And so that really expedites the process for us. So, you know, you could take a, uh, an SBA loan that might take 30 to 45 days, uh, you know, on average for SBA to underwrite and, and get you an answer. And then that's something we could probably get done within a about 14 days. Um, you know, obviously depending on the circumstances, but you know, just the, the regular process, you know, we have a few of those, um, in the pipeline right now and it's been pretty, they've been pretty responsive. You know, we submit applications, um, through Eran for just regular seven loans and we have an underwriter assigned to'em typically within about two to three days. So I, I think it's probably to an extent normalized, um, as much as it could at least,
Speaker 2:Well, that's good. That's helpful too. Cuz you know, part of it that's uh, you know, keeping the money flowing and keeping and things moving, uh, is a, is I think a big part of the recovery from this. Uh,
Speaker 3:Mm-hmm<affirmative>
Speaker 2:One thing is interesting too. I think cause one of the things SBA did and part of the cares act was if you had an existing SBA loan, they're making what six payments is that correct? Six monthly payments.
Speaker 3:Yeah, that was, that was interesting. So, uh, yeah, if you have an existing SBA loan, um, and I, I, I can't recall if it had to be originated or, or funded prior to February 15th. I can't remember if that was really a, a rule of it, but if you had an existing SBA loan, really SBA will make your principal an interest payment for the next six months. Um, so that was, that was a, you know, when we saw that come through an email or a notification, I mean that was really neat cuz that really helps a lot of people out. Not only are they not deferring your payments well, in a sense they are deferring'em cuz they're not making you pay them, but you know, they're at actually making the principal and interest payment for you. And on top of that, I wanna say any new SBA loans that are funded prior to the end of September, I believe it is. Um, actually SBA will still make your first six months worth of payments.
Speaker 2:So really, you know, if you think a lot of businesses, even like, you know, that's pretty good support when you think, okay, I got six month of payments, I got PPP loans, a chance to get an idle loan. You know, there's quite a bit of access to money I guess, to help our businesses out. Yeah. Mm-hmm,<affirmative> adds up pretty fast, so
Speaker 3:Oh yeah.<affirmative> it helps, it helps out a lot in the big picture.
Speaker 2:Yeah. And like you said, you know, I think the only well, and they really don't, you know, going back to the idle loans, they really don't go evaluate your collateral either. Right. I mean they're just kinda, um, hoping you're good for it. More, anything else?
Speaker 3:Yeah. That's why I said it almost seemed like it was too easy of a process.
Speaker 2:Yeah. And that really was set up. I mean the, I mean the ID program's been around, I dunno for a long time, but um, essentially for different disasters, mostly probably hurricanes tornadoes, things like that. I think mm-hmm,<affirmative> something. Yeah.
Speaker 3:Yeah. They said typically they, you know, their processing time is about 14 to 21 days in most of the applications that they get for disaster loans, um, are from, you know, hurricanes, as you mentioned, like hurricane Katrina was a big one that SBA talked about or tornadoes such as the Joplin, Missouri tornado was a big one where SBA had a lot, a lot of, um, a lot to do with that. So, you know, they were, they were assuming that, you know, our typical turnaround time is 14 to 21 days. But when you open up the idle program to a disaster that isn't isolated to, you know, like new Orleans for Katrina or Joplin for the tornado, I mean, this is, this is a lot bigger. This is the whole country can apply for this. They really had no idea at first what their turnaround time was gonna be. So, you know, they were saying four to six weeks. And when you tell a, a business owner that they're gonna have to wait four to six weeks in order to get their funds when they need it tomorrow or the next day, I mean that's when the PPP money really came and helped out. Um, so that all these different programs kind of went hand in hand with each other as far as, you know, if there wasn't one program to help out. Now there was one for down the road and if you're looking for one down the road, you could have the PPP to help out now. And it's just, I, I can't even imagine the decision making that went on behind the scenes with Congress or the SBA or U S D a or anybody like that, Fs that, um, as far as how to get these programs implemented, it just it's mind blowing.
Speaker 2:Yeah. And I think that's one, you know, it's kind of sometimes fun to give the government a hard time, but even get the idle program working that fast. Um, right now I think, you know, it was pretty good just to get the scale, to get that money mm-hmm,<affirmative> going out and, uh, makes a huge difference. So,
Speaker 3:Okay.
Speaker 2:Now a lot of people may, you know, news press there's other programs, I think, uh, there's a main street program, uh, S BNI program, which is more focused on communities, you know, communities under 50,000, like ours are available. Um, you know, seems like the main street program. You know, if you see that really doesn't, I haven't seen too many customers really fit it. Very good, but the BNI program might, um, uh, what's the best way if you're kinda like, okay, I need to find some other resources. What's the best way for somebody to go about exploring that.
Speaker 3:Um, you know, so there's, as you're saying the BNI, so that's the business and industry street program through the U S D a, they came out with a working capital program, um, essentially that will it's for working CA working capital purposes. Um, so that's gonna include similar things that the PPP loans included. So payroll costs, healthcare benefits, salaries, but in addition to that, um, you could use the U S D a loan for inventory supplies it to make your principal and interest payments. Um, now this one is a 10 year repay back. And so it's A1 year maturity, and then you can defer payments, principal payments for up to the first three years, and then you can do interest for up to one year. Um, now these are a little different than the SBA as these almost have to be a little done, more like a conventional loan, um, where you have to have, you know, enough collateral to secure the debt and you have to show repayment ability. Um, but there there's benefits to the lending institution to get these done in order to get the money out there fairly quick. So, you know, that's, that's one. And then that main street lending program that you were mentioning. Yeah, that's a little bit, that's a little bit different and we haven't, we haven't really done any of, well, I don't even think anybody's done any of those. I don't know if they're accepting applications quite yet or not, but we have our registration in with the, uh, federal reserve of Boston to be a, a qualified lender for the main street lending program in case we come across any companies that we could help or that we could utilize the program for. And I saw there's only six banks in the state of Kansas that are approved to do, um, the main street lending program right now. And so that's more or less, you know, you could have up to and you'll have to correct me if I'm wrong, Chris, but it's 10,000 employees, I wanna say a little bit bigger. Um, you could have, you know, your, your revenue limitations are a lot higher. Um, so that one, how they count your loan amount from my understanding is they take six times your EBIDA and then just, you know, so for example, if you had an EBIDA, which is earnings, poor interest taxes, depreciation, amortization of, you know, a million dollars, well, you would do six times that basically you're, you're eligible for 6 million, but then you have to reduce that amount by the outstanding debt, whether it's been drawn or undrawn. Um, so if you know, you have 2 million in outstanding debt, then, you know, you, you qualify for 6 million, you reduce it by the 2 million in outstanding debt. So then you'd have an eligibility of 4 million that you could potentially qualify for. And that one, the repayment period, they just changed that, but that's five years. And I believe the, the first two years are no payments. And then I think the, um, second year it's 15 per it goes 15, 15, 70 as far as, um, you'd make basically 15% of the loan payment, the third year, 15% of the loan payment the fourth year, and then you'd have the remainder due in the fifth year. So, you know, the, the issue with that one I see is it is a pretty quick repayment period. And I think it's developed a little bit more towards a lot larger companies and you know, what we really have out here in Southwest Kansas, but we're still going ahead and have our registration, um, pending right now. So if we, like I said, if we do run across anybody, we'll be able to utilize that and try to help'em out with it.
Speaker 2:Yeah. You think about, and I think some of our businesses out here are just a little more capital intensive, more than more equipment and more debt. And, you know, as a percentage, their cash flow, kinda like you're saying, and I think it's yeah. And, but that's good. I think, like you said, you know, who knows what you run into? So if we find one that fits and we got that tool available, so
Speaker 3:Right.
Speaker 2:Uh, yeah, I think the key is like, we'll just kinda figure it out if it works for you. So
Speaker 3:Mm-hmm<affirmative>
Speaker 2:So, Hey, before we finish up here, Brandon, what's it. Um, I guess, you know, one of the things we go when we talk to customer and, you know, part of that, you know, you work at building relationship with customers and, and, you know, it's hard. I mean, you actually become part of their business in a way, you know, cuz you know, you're trying to be an advisor, help them kind of through things. Um, you know, how's that kind of, uh, I guess maybe I don't know how the way to say this question, but describe how it feel, I guess when helping that customer, what's it like to get them through this process to maybe get their business to keep going? Or what is that like or what does it feel like?
Speaker 3:Oh, it's, it's awesome. I mean, it's, it's a terrible and unfortunate situation that all these small business are in, but when you can do something to help them out, you know, whether it's, it doesn't even have to be, uh, PPP or ID or any of these loans we're talking about, if you, you know, have to defer a payment or a few payments for them to get by. I mean, just the, the gratification that they show from making a, or from being able to make a decision like that or from being able to, you know, help them with a PPP loan. I mean, it's, it's it, I mean, it's awesome. I don't really know how else to explain it, but just being able to help them out and being there for them. And you know, like I had mentioned earlier, there were other banks around the area that weren't processing these loans just cuz they weren't SBA lenders and having their customers come over and I mean just, you know, how happy they are and really the sense of relief that they get by, okay. There's somebody there to help me out and then basically help me survive in advance to the next day. Um, being able to do that for those small businesses has been, has been really satisfying.
Speaker 2:Yeah. And really, and I guess it's kinda unique cause when we started planning this, you know, the PPP process was closed, but now it's back. Cause I don't, there's there's over a hundred billion left right. Or something like that.
Speaker 3:Yeah. I don't know what the amount is, but I know it's, it's lasting a while now.
Speaker 2:Yeah. And I don't. And so, you know, it's kinda interesting. We do have a few come in and so, you know, basically even if you had a PV loan and know somebody that may need one, you know, we still have an opportunity through was August 8th. Is that right?
Speaker 3:Mm-hmm<affirmative> yep. As of now, as of now, we'll see if that changes with another interim final rule.
Speaker 2:Yeah, yeah. Subject to Congress. So who knows? Uh, yeah. Maybe, maybe they'll keep extended if, as long as there's money. I don't know. Yeah. Um, but uh, and one of the things that's kind of interesting notice, I think is not only through our customers, that we help it even nationwide that, you know, I think as the longer we've gone, the process been help more smaller businesses, um, single owner businesses that, you know, um, you know, I think the bigger businesses had an advantage because you know, maybe they had a CFO that gave us just pristine numbers to work off of. You talk about a perfect application to look at, you know, some, those guys, our gals get put together quite the applic, you know, really easy, but you know, I think, you know, what kinda some are, you know, maybe single owner businesses or sole proprietors just, you know, trying to survive and just, it's harder for them to put that stuff together. So I think we're finally getting the most, all those taken care of, or kind getting through the process and then, and helping them. So that's kinda really good too. So
Speaker 3:Yeah. You know, you gotta, I think there's a lot of single owner businesses out there that thought that, Hey, you know, I don't need to apply now because I'm not necessarily, or my business won't necessarily be affected by COVID and what's going on. But you know, here we are three months down the road or three and a half months down the road from when all these new, um, regulations for COVID and the pandemic went in place and you know, three months down the road from when the PPP started and you know, they're seeing that, okay, they might not be affected at the point where they have to close their doors. They're affected enough to the point to where they should probably apply for these PPP loans. Um, you know, as long as the money's there is kind of a backstop. And so I think those are the ones we begin lately, um, are the ones that I, I feel are, are probably thinking of it more that way, you know, hindsight being 2020, probably thinking that, okay, I should have, I really should have applied when it first came out or a little sooner than I am, but you know, at least they're taking the steps now to get it completed.
Speaker 2:Yeah. And that's a good cause, you know, a lot. And there's a lot of people I think, well, and even sometimes for us, for he's like, oh, only these businesses are affected and really at some point almost everybody's affected and mm-hmm<affirmative> and uh, whether you have, um, you know, was talking to the guy today about, you know, having, you know, uh, employee test positive in how else and okay. That affects. And he may even kind of halfway shut your business down because you have to quarantine people and yeah. And right. Not ongoing deal. So we better, uh, grab it while you can. So cuz you just never know.
Speaker 3:Yeah.
Speaker 2:Well Brandon, uh, I appreciate the time to talk about this and, and like I say, if, if you are out there and uh, you haven't got a PP loan or have questions about the other programs that are out there or how else we, or can help you with an SBA deal or, or any kinda loan program. And, and like I said, if even ag producers can use SBA, which is kinda unique, they just turned that on. Cuz historically you couldn't, um, with the ID loans and PPP loans, stuff like that. But there's other programs too. So if you may ask questions, make sure, call us and check us out. So, uh, thanks, Brendan. And uh, yeah. Thank you
Speaker 3:Chris.
Speaker 2:Yep. You guys have a good rest of the day.
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