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Pandemic Relief Lending Has Launched. Time to Choose Your Program

[Updated: Apr 08, 2020 ] Apr 08, 2020 by Marc Rapport
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Phil Wahl has seen a lot growing up in Augusta, Georgia, but nothing like this: The Masters Tournament has been moved from April to November, and his bank is being swamped by small-business people urgently seeking pandemic bailout help from the federal government.

Wahl is the son of a general manager of legendary Augusta National Golf Club, hired by Bobby Jones himself, and now is president of Security Federal Bank, a $962 million institution based just across the Savannah River in Aiken, South Carolina.

"In my 35 years of banking, I've never seen anything like it," Wahl says of the rush to apply for Payment Protection Program loans, a $349 billion section of the CARES Act, the $2.2 trillion piece of legislation rushed through Congress to spur America's economic recovery from the shock of the COVID-19 pandemic.

Three kinds of loans, plus debt relief and counseling

The Small Business Administration (SBA) is in charge of the relief lending programs, which are being funded by the U.S. Treasury. Here's what the SBA has going, including who can qualify and how:

The 880-page CARES Act was signed into law on Friday, March 27. Federal officials spent a week rushing to put the pieces together, and the PPP was launched on Friday, April 3. Leaders at financial institutions across the country, at least the thousands that have chosen to participate, spent the weekend handling the rush of applications, Wahl included.

Hardly bankers' hours!

Wahl said Monday (April 6) that he hopes to be able to begin disbursing the funds as early as today (Tuesday, April 7).

Time to choose

Real estate brokers, agents, and property managers of all stripes are among those affected by the downturn, of course, and for every business, the question will be which program is best.

Here's an amended FAQ about the PPP program posted Monday evening by the federal government.

Here's a list which neatly compares the EIDL and PPP side by side. It uses SBA guidance to lay out the terms, what the loans can be used for, and under what conditions the loans can be forgiven.

Some caveats: Only the PPP loans can be forgiven. The EIDL loans cannot. And people who rely solely on 1099 income instead of salaried W-2 income, which includes real estate agents and many other professionals, probably will have to do their own applications, since they're considered self-employed.

Real estate agents aren't alone in that, of course. I have a family member who's a psychologist in private practice. Because she's not an owner of the group she's practicing with, and her practice has taken a big hit while she transitions as many as she can to teletherapy, she has to file her own PPP.

She's working with her CPA to figure it all out. Related, the American Institute of CPAs has issued a two-page list of recommendations on how to apply for the loans. It's for lenders, but the borrowers will be the ones expected to provide said documentation, so it's useful for anyone going that route.

Meanwhile, that $349 billion is not expected to last long, and the Treasury Department today (Tuesday, April 7) was reportedly planning to seek another $200 billion to inject into the coronavirus small-business relief effort.

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