Coronavirus Survival Webinar Series: SBA Loans

Ken speaks with Jarret Prussin, CEO of SBA Funding, the largest legal lending brokerage firm in the U.S. Be sure to listen to the end as Jerret answers listeners’ questions.

00:00
00:28
The broadcast is now starting. All attendees are in listen only mode. Hello everyone. This is Kim Hardison and welcome to today’s webinar. Uh, this is part of our ongoing, uh, coronavirus Bible webinars series, which will be held each Tuesday. 1:00 PM Eastern stay tuned for next week. We’ll have another one dealing with employment law that has been followed by that with tax credits the following week.
00:28
00:50
So today, uh, there’s some still a flux about what’s actually going to be the, uh, Congress would want to pass. So we, but we still wanted to get the information out there. And we have one of the leading experts in the country, Europe, Russia, uh, with SBA loan group. And, uh, Jared, thank you for,
00:50
01:18
I know you’re busy as hell. Try that you get barraged with all these levels and trying to deal with Congress from everything, but you can, uh, Mmm. Tell us a little bit about your group and then tell us what’s going on. W w what we need to know. Thanks, Ken. So I’m Karen and CEO of SB one group largest better VA loans to lawyers in the United States here.
01:18
01:44
Here’s where we are. Here’s what we know. Here’s what we don’t know. Federal government. Hopefully we’ll be signing a bill today where they are going to make $300 billion available to small businesses. Here’s how you qualify. If you are a business, 500 employees or less, and your business has been around prior to March 1st, 2020, you need to get the following information ready?
01:45
02:13
Number one, payroll, how much pay? What was your monthly roll for the last 12 months? Okay, too. What’s your monthly rent for the last 12 months? Three<inaudible> additional depth schedule. I E you have existing bank loans. What’s your monthly payment on those. You might have existing copiers or any other computers. Okay? Our leases, any monthly obligations?
02:13
02:44
What are those first together? Okay. You add up the numbers of the, what we just discussed the qualifies to $10 million. You broke out when you said times what I mean? So you take, you take the monthly number. I just told you, you times it by it. Nope. And then you can borrow it to $10 million monthly, if they’re,
02:44
03:09
um, if they will on your rent grand a month, Your audio is terrible, man. Yeah. I’m going to dial in another phone at the second. I, Okay. So why he’s doing that? So what I’m hearing is you figure out what your, uh, what would you end up buying or employees? You figure out what your monthly payroll,
03:09
03:34
your monthly rent, your much Lee, uh, lease payments, uh, mobile payments. And then times it, times 12, and guess what you’re eligible for up to $10 million? Is that what you order? That’s what I heard. Okay. Please call him back in, because this is important. I want to be able to hear him and I,
03:34
03:57
this it’s like, you know, talking to one of those. Sorry about that, Ken, is this better? Yeah, just a little louder, please. Perfect. So in essence, here’s a simple calculation. If let’s say your rent is 40,000 a month, let’s say your payroll is 40,000 a month. And let’s say all your other debts are another 40 grand.
03:57
04:18
So that’s a hundred thousand dollars a month in acceptable, um, debt. Okay. You times that by 12, that means your company is eligible for 1.2 million. Here’s what we know so far. Your company does not need to show a profit. The banks are not doing underwriting. All we’re doing is verifying that your company and that you have this debt schedule.
04:18
04:45
And then we are going to be giving you the money. Mmm. Tax returns, no tax returns Right now. It looks like we have to supply zero tax returns again. Okay. So far, this is what we’ve been told. I don’t know if that’s going to change, but as of now, no tax returns. Okay. So yeah, they have announced that a percentage of the loan is going to be forgivable.
04:45
05:02
We believe if you keep your employees for the next 12 months, they’re going to give you a percentage of the loan that you don’t have to repack repay back. We do not know what that number is. Again, this is what they’re negotiating. Um, I do not know if you’re going to have to make any payments on them. First year. It could be zero payments.
05:02
05:22
It could be interest only payments. It could be a combination. Um, I do not know the length of the term. We think it’s going to be, um, 10 years. And we do not believe you’re going to have to pledge any personal collateral. And if you have any existing loans, which most people do in most companies, the bank will take a second behind them.
05:22
05:48
Whatever current loans you have in place. Now there’s some confusion out there. There’s the SBA emergency. Uh, um, do you know, $2 million program that you can go log onto the federal government. And then there’s this special SBA emergency program that I’m talking about. I’m advising our clients. Let’s wait to see what the bill is because the federal government is concerned that if you get the money through them,
05:48
06:09
it could take months and months to get the money. Whereas this is why they’ve come to us in the private sector, because they think we can deploy the money in weeks. Uh, this is what we know. And when the, um, uh, when this becomes announced, every trial lawyer will get an email. Uh, it’ll say exactly what the program is and exactly how to get started.
06:09
06:28
We are building an automated program, uh, so that we can expedite this as fast as possible. We do not believe we’re going to charge any fees. We don’t know if we’re going to be allowed to charge any fees. We think our service will be free to the lawyers and other borrowers. Uh, we just want to do what we think is the right thing to do as Americans and help save jobs.
06:29
07:00
So that’s what we know so far, and I’m more than happy to answer any other questions people have. We have a question that asks if you pay yourself through a draw, is that part of your payroll calculations? Okay. Okay. That’s a great question. We do not know the answer to that question. However, there are sort of negotiating employees who have a hundred to $150,000 salary or lower is going to cover.
07:00
07:30
We do not know the answer on the draw question. Great question. They haven’t told us yet. Okay. A listener is asking, uh, if you believe the funds will run out, Absolutely unequivocally, no fucking way. Excuse my language. If they don’t do this, this is the most catastrophic event in the history of, you know, the financial market so that they have made it very clear to us that,
07:30
07:47
uh, they’re going to do what they need to. And they key is to save jobs here, everybody. Um, you know, they, they know the world has come to a halt and they want people to get paychecks. I think if they have to give money, they’re going to give money. Because if this money doesn’t go into the economy and people don’t get paychecks,
07:47
08:12
you know, that could be a whole nother Armageddon that we wouldn’t even know what to do. Someone else asks. I heard that there were that there was going to be grants given without having to pay them back, uh, to put towards payroll, excuse me. Um, if yes, then what is needed. Okay. What we’ve been told is a percentage of these loans can be forgiven.
08:12
08:29
We do not know the extent. Um, they have not confirmed if that’s going to be a percentage or the entire part of the loan. We do not know the answer until they sign this bill. That’s why people are confused. We’re here. People are saying, if you apply directly to the website, you don’t have to pay anything. People are saying,
08:29
08:47
it’s only going to be a percentage. We do not know the answer until they announce it, but I can tell you the information I just told you. We know for a fact you’re going to need. So I highly advise you get together all your payroll information, which should be easy to do with your payroll service. I would get a full debt schedule.
08:48
09:07
I would get a 2019 year end P and L and balance sheet. And I would get a debt schedule as of three, 2020. Um, I would get a copy of your lease for the office if you have it. And most importantly, I would get a copy of your incorporation papers, whether you’re an LLC, a C Corp S Corp. So,
09:07
09:31
cause they need you to prove that you’re a legitimate entity, that stuff, regardless of what the program entails, you will need. I advise you to start working on that. Now Barry asks, if this is separate from the disaster loans Again. Yeah. It’s unclear which buckets the federal government is going to put towards this. I know when the president went up on,
09:31
09:57
gave it announcement two Thursdays ago, whenever it was, he says, we’re going to be providing a $50 billion emergency fund, right? The, the SBA mobilized that day later. And the problem is, is the, the SBA office that normally administers all the U S emergency funds, whether it was hurricane Sandy, Katrina or other disasters, it’s it was all done out of their Dallas office.
09:57
10:18
They are, I’m afraid they’re going to be more than overloaded. Um, so again, we don’t know the answers to that question. There will be potentially multiple pools of money that companies can go after. We do not believe you’ll be allowed to go for more than one of those buckets, right? But there could be separate divisions of the government offering these loans.
10:18
10:39
Again, we won’t know the exact details until they sign the bill, hopefully today. Okay. We’ve got a number of people who may have joined us late, and there are a number of questions about the documentation that needs to be assembled. Could you run through that one one last time, very quickly. Absolutely. Number one, I, if you use a payroll service,
10:39
11:03
I would get from them your last 12 months of payroll activity, including your payroll taxes. You want to go from three, one, 2020 and go back 12 months. Does that make sense so far? Yup. Okay. Number two, I would get a copy of your incorporation papers, articles of incorporation. You know, every state is a little bit different,
11:03
11:29
you know, summer LLC, summer, a C Corp summer escort, whatever your corporate documents are. I would start getting those in order as well, because they need those documents to prove your real entity. Does that make sense? Absolutely. Okay. Number three, you want to get a copy of your current debt schedule for the company and on the debt schedule,
11:29
11:49
it should list all of your debts. So I have a bank loan with bank of America. My monthly payment is $3,000. You want to get documentation of that? I have a copier that I pay $300 a month. Uh, you want to get a record of that? I have a, um, a V a car for the company, uh,
11:49
12:16
that’s $300 a month. You want to get a copy of that? My office rent is $20,000 a month. You want to get a copy of that? Lease any financial debt obligations, your company, has you not only one want to list out a full debt schedule too, right? If possible, get a copy of all those contracts ASAP. Have you heard anything about a per employee salary cap on this?
12:18
12:38
Yes, that’s a negotiation point. They were talking about a hundred thousand dollars. The first draft I read of the bill was a hundred thousand dollars cap per employee. The next one, they were potentially talking to Democrats to increase it. So the old version I saw, which was days ago was a hundred thousand dollars. I have no idea if that’s been increased,
12:39
13:04
but I know the Democrats were trying to get that increased, but I don’t know if it was increased. We won’t know that specific answer until the bill is signed. A couple of people are asking about the fact that they own the building rather than lease it are those records necessary. So, so, well, I want to answer that in two ways.
13:04
13:27
Okay. A lot of times when businesses or a law practice owns a building, um, they have two separate entities. They have the law firm that is a Le less, or with a separate entity that owns the building. I don’t know how that’s going to be addressed under this new, um, legislation. Um, so number one, I wanna,
13:27
13:46
we want to make sure that you can get paid on those. Cause in theory, you potentially could be paying yourself. And number two, it’s very easy to go online on Google and put together a simple lease. Uh, so I would advise if the two entities, which are both common ownership, if they don’t have a lease agreement, you could download one off of Google.
13:46
14:12
I think they’re very easy to do We have someone asking, uh, what, is there a specific name to this program and how do they ensure that they are on all communications going forward? Okay. Um, the exact name of the program is there’s a couple of answers to your question. There’s going to be potentially one that they call the federal disaster,
14:13
14:33
uh, emergency fund. I could be saying it wrong, but that’s one where you can go on the federal government website. The other one they want to administer through the seven eight program. The seven eight program is the program that we’ve normally been giving, working capital to all of these law firms for many, many years, they’re going to, they want it distribute the money through the seven eight,
14:33
14:55
what I call special program, um, because they think that the private banks that give these SBA loans is going to deploy the money faster. So I think the one that I’m referring to will be falling under the seven, eight special program. The problem is if you go on the sba.gov website right now, and look at the seven, eight loan, that is not what I’m talking about.
14:55
15:18
This is a new program where there’s going to be a hundred percent guarantee by the federal government, which again, that’s not normal on SBA loan. Um, but the details and the name of the program have not been announced yet. Well, the interest rates we’ll be implementing, are they going to be like 70% or two or 3%? No way. You’re going to be closer to three to four to 5%,
15:18
15:40
nowhere near seven to 8%. And there’s a high probability. These are going to be fixed rates. Okay. Okay. We’ve got a couple of people asking about the timing, all above all of this. Um, how soon can the loan app get started? How soon after application is money, uh, distributed and is it distributed monthly or in a lump sum?
15:42
16:09
Great question. So this is where people are going to have to make business decisions. If they go through the federal government website, it could take months to get the money because the federal government doesn’t have the infrastructure to do this quickly. If you go through the program that I’m talking about, um, we, our goal is you can fill out an application and a matter of hours at most,
16:09
16:40
and we want to make it very simple and automated. The banks are going to look to deploy the money within 12 to 20 days. And yes, I’m 99%. Sure. It will be one lump sum payment. Another couple of questions about what to include in the debt schedule. Uh, this listener is asking about health and liability insurance and worker’s comp insurance are those bundled into the,
16:40
17:09
uh, the debt schedule. I believe every monthly obligation a company has, is going to be qualified under the program. So yes, I am. You know, most positive that those health items you’re mentioning are, um, are going to be eligible. I think the government is trying to simplify this as best as possible if a company had a contract and they had a monthly debt obligation that qualifies,
17:10
17:41
I think it’s going to be that simple. Do you know of any, uh, do you know of any program similar to this for nonprofits? Great question. Normally there was not a program available. I believe the federal government is going to allow for non-for-profits to be a part of one or multiple of these programs. I do not know, but I am fairly confident that non-for-profits are going to qualify.
17:41
18:07
Why? Because a ton of people in the United States work for non-for-profits and they want to make sure that people get their salaries. So I am fairly confident there will be a program for nonprofits. All good questions. Anyone else We tried to get to everyone’s questions? Nope. We’ve got some, we’ve got a couple more coming through. Do we have some more time,
18:08
18:34
Jared? You okay on time? Sure. Go ahead. Yeah. Can we include monthly advertising expenses if someone asks? Yeah, absolutely not. I do not believe that’s going to be allowed. Okay. Is there an incentive, Let me just say this here’s what might be tricky. And I don’t know the answer to this. Some companies, uh,
18:34
19:01
or law firms have, let’s say a 10 month contract, right. And you know, they’re in month three and they’re supposed to be paying 50,000 a month. We don’t know if that’s going to be qualified. That might be tricky because the government might not consider that essential. Yeah. I, but I don’t know the answer Versus a, for federal versus private lending through private is a private,
19:01
19:28
faster disperse disbursement. Uh, and will they forgive a percentage of the federal loans? Okay. Okay. Under the seven, eight special program, this is usually distributed by banks and also non-banking institutions. The banks and the non-banking institutions are getting a hundred percent guarantee from the federal government. So if the borrower defaults, um, it’s, uh, you know,
19:28
19:51
it’s covered by the federal government. We believe under the seven, eight special program that I’m referring to a certain percentage will be forgivable, but we don’t know how much nor do I know if there’s going to be a difference through the seven, eight special, uh, forgiveness law part of alone. And I don’t know if the forgiveness, if you get the loan directly from the federal government is going to be the same worse,
19:51
20:15
lesser Mort. I do not know the answer to that question. All right. We’ve got several people, a one asking how they get in touch with you. And we have someone asking, will your group be processing loans for each state, or is this all going to be handled locally? We we’ve already set up a national call center, um, for the United States.
20:15
20:43
Uh, we service every state in the country. We service every industry. We don’t just do lawyers. We do every industry. So we will be processing this for every type of, uh, business in the country, every state in the country. And, um, what I will be doing is once this is finalized, okay. Hilma will be getting an email with the instructions that can harness and can send out to every single Hilma member or relationship.
20:43
21:07
So yes, everybody will get an email, but we’re trying to make it as easy as follows. You’ll get an email. You can click on a link and on the link, it’s going to tell you exactly what the program is. Then you can click to sign up and then you’ll see, there’ll be a special box asking you let’s say for five to seven documents and you can upload each one of those documents into your own box.
21:07
21:36
Then once you finalize that an automated email is going to go into the reviewing part of the group to make sure that you’ve uploaded the right documents. And then once that’s been done and automated email will be sent to one of the banks to process it and fund the doctor didn’t fund the loan. Very good. Any other questions, folks?<inaudible> thank you so much.
21:37
22:14
My pleasure can, well, folks can, unless you have anything, that’ll bring this webinar to an end. One thing, that’s it. But uh, we want to share, or can we share the, uh, the wheel? You know what I’ll do that. You wanna put that slide back up? Yeah. Okay. Alright. Just one moment while I click over here.
22:19
22:50
Any more questions for me? Yep. Appreciate it. That’s perfect. Time and stay safe, everybody. Alright. You too. Bye. Bye. Bye. So, so we’ve got a, uh, Okay. This is where everybody out there. We have a coronavirus survival kit. That’s on the pill, the whole page. Just go to<inaudible> dot org and you can download a lot of things.
22:50
23:18
We’ve got some videos on there. We’ve got some articles. We’ve got some forms that you can use for your office protocols. We’ve got a video. Okay. Management. Yeah. You can go to pivotal or where are you going to go with a hole for slash rolling. So check that out. I also do pet podcast this morning. Talk about everything.
23:19
23:45
We had enough that, that shouldn’t be downloaded to them. So anyway, we will keep you all informed. Uh, and this will be downloaded into the coronavirus Bible kit, vacation worker back. Let’s do it again or tell you a friends and family. Um, so, so next time, this is kid hardest, dedicated your success. Take care.