CARES Act Q&A
Q
If the rate is 0.5%, then on a $100K loan we would earn about $42/month. That is less than the servicing costs MBL charges ($30/month basic + $30 SBA premium = $60/month). So, essentially the CU would be losing money each month. Is that correct?
ANSWER
The Lender is paid 5% of the loan amount up front… that’s $5,000 of fees from the SBA paid directly to the Lender. We would charge between $25-$50 to process up front (we’re still working out the cost structure of IT). These will likely carry on the books for ~6 months, so your earnings would be $5,000 origination fee + $252 interest – $360 servicing = $4892 (less $25-50 processing).
Q
Can we limit our SBA Loans to existing members due to the volume?
ANSWER
Due to the volume of these types of requests you can decide to take that action.
Q
Do you know when final guidance from the Treasury and SBA will happen?
ANSWER
According to the act they have 15 days to make those decisions.
Q
For businesses whose owners take draws in lieu of being on payroll, how should these amounts be counted, and are they covered under PPP as payroll is?
ANSWER
SBA has not listed the documents required to certify the expenses. When we have that information, we will clarify. Per the language in the act all eligible payroll proceeds are on slide 11 of the PowerPoint presentation.
Q
Has there been any word on if this is stackable for businesses that already have SBA loans?
ANSWER
There isn’t any language in the act that would exclude a borrower that currently has SBA or an EDIL loan from obtaining a PPP loan. The only language states that they cannot obtain a PPP loan for the same use of proceeds that they have an EDIL loan for.
Q
Do you have these PDFs on your website? Or can they be emailed over?
ANSWER
All PDFs in the presentation will be available on the MBL website. You may view them at the top of this page, or click here. You can also obtain copies (including the fillable form) on the Treasury website: https://home.treasury.gov/cares
Q
If we have seasoned SBA loans but no longer offer new SBA loans, what is being offered/available to these borrowers? Deferrals?
ANSWER
SBA has already given guidance to lenders to consider deferrals, as appropriate, to aid in the orderly repayment of the loan. With the section 1112 of the CARE Act they will also make payments on all SBA loan currently in regular servicing status. See page 28 of the PowerPoint.
Q
Not being an approved SBA express lender will not prevent us from doing these loans?
ANSWER
As long as you have an active 750 agreement with SBA you can do PPP loans. You do not have to have the specific Express Loan Authority. The PPP is not considered an Express loan.
Q
Once SBA approves, have they given any indication on how long it will take to send over the new closing documents to fund?
ANSWER
We do not have the exact time frames as of yet. As we get further guidance from the SBA on the program guidelines and develop our process/procedures we will communicate the anticipated time frame.
Q
Will borrowers be able to apply for these loans if they have also applied for the EIDL loans?
ANSWER
Yes. They can also use the PPP loan to refinance the EIDL loan. Keep in mind that they will still be required to verify the portion of the loan that will be forgiven and those amounts that do not qualify will have to be paid in the two-year term.
Q
Will we receive a copy of the PP for our reference?
ANSWER
The PowerPoint presentation is on the MBL website.
Q
Can we submit application or serve as an agent for other CU’s that don’t have the capacity to submit on their own?
ANSWER
SBA would deem you a Loan Service Provider, which requires a written agreement between the Lender and the LSP, and acceptance by SBA.
Q
Can CU’s that have been affected apply for a PPP loan themselves?
ANSWER
Based on our understanding of the CARES Act, no.
Q
If a borrower has related entities, should they make one application covering all entities or separate applications for each entity that has payroll?
ANSWER
It would be best to keep it simple and have each entity obtain a separate PPP loan.
Q
If there is a change in the business operations of an entity (temp closure for a remodel in 2019 and now it is open as an example), is there an opportunity to report expected future payroll as opposed to historical for potential reimbursement?
ANSWER
At this point there is not language in the act to address this question. Slide 9 in the PowerPoint presentation shows the only option to calculate the maximum loan amount.
Q
Will borrowers who are currently delinquent on their SBA loans be disqualified for the PPP or EIDL loans?
ANSWER
Currently there isn’t language in the act that would exclude them. We will have to see what guidelines SBA will place on the program.
Q
Are there limitations on the payment of rent when a business exists in an OPC/EC relationship, where the OC rent payment would be to the commonly owned EPC?
ANSWER
There isn’t any language in the act for this situation. We will need to see the guidelines that SBA comes up with for the program.
Q
If a borrower had a change in rent amount recently or within the next couple months, which rent figure should be utilized?
ANSWER
Because of the requirement for validation you should be able to utilize the current rent payments as outlined in the lease. However, SBA might provide additional guidance when the guidelines are released.
Q
Can a business that is currently not a member of our credit union, still apply through us and not their current bank or current credit union?
ANSWER
Yes. You would still need to meet the criteria for field of membership; and comply with your policy for new members including BSA and the beneficial ownership rule.
Q
Our CU is not currently set up with the SBA. What do I need to do to get set up with the SBA to start offering the PPP?
ANSWER
Credit unions that are not currently an SBA-approved lender can apply for PPP authority by submitting an application to the following email address: DelegatedAuthority@sba.gov.
Q
Can a member apply for the PPP and the economic injury disaster loan at the same time?
ANSWER
Yes. However, the use of proceeds cannot be for the same purpose.
Q
What part of the loan is forgiven if we offer $100K for payroll expenses?
ANSWER
All proceeds that are eligible under the act. See page 18 through 22 of the PowerPoint presentation. If all proceeds were eligible then the entire $100,000.
Q
Will MBL facilitate the required information to SBA on the loan payments for existing SBA loans in section 1112 of the Act?
ANSWER
If MBL currently services your SBA loans we will provide the appropriate information to the FTA. Currently SBA has not given instructions to this process. We will keep you updated on the process.
Q
We are receiving several inquiries from non-members my questions is do we have to service the non-members as well? We would like to prioritize current members since we have limited capacity and then assist non-members. Any thoughts around that? Or is everyone just servicing any inquiry in the order received?
ANSWER
That choice is up to how the credit union wants to proceed.
Q
What verification required for authorized signers/titles, entity docs, etc?
ANSWER
The same requirements as your other loans. You should have already determined this within your new member set up process when they became members of the credit union.
Q
Are churches eligible for the PPP Loan?
ANSWER
Yes.
Q
Does MBL plan to have expanded hours and/or work this weekend to address the anticipated flood of applications?
ANSWER
MBL will staff accordingly.
Q
Sounds like applications are being accepted on Friday. I have many members worried about getting in the queue on time. Do we know how early these applications can be submitted on Friday?
ANSWER
SBA has not provided any clarification on this yet.
Q
If the next payment due date for 7a loan is 03/01/2020, will that loan be cover under 6 months payment program?
ANSWER
The language in the act reads the next scheduled payment. The act was approved on the 27th; so the payments SBA would be responsible for would begin on the 04/01/2020 payment. The borrower would still be responsible for the 03/01/2020 loan payment.
Q
If all owners / partners / members of an entity owns less than 20% share, in that case who can sign and submit application?
ANSWER
The organizational documents will tell you who has the authority to sign and obligate the company.
Q
How will MBL processing the PPP loans impact the processing of conventional loan applications?
ANSWER
It will not impact the processing of any other loan product.
Q
What is your recommended order for application of relief loans? Is there any order of application that could be a disadvantage for a borrower? Would applying for one loan type make them ineligible for another? It appears the PPP is something for everyone to utilize, as well as at least the $10K portion of the SBA EIDL program. Please share your thoughts. Thank you.
ANSWER
We don’t have enough details on the guidelines for either program to be able to answer. It depends on the guidelines and the borrower’s situation.
Q
What is approval turnaround time and closing documents? Documents required and fee structure?
ANSWER
Currently not determined. When we obtain the additional guidelines from the SBA and are able to place those into procedure, we will communicate the specific information to the credit unions.