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My Experience with the PPP Loan: New York Title Insurance Updates

Amid this COVID-19 pandemic and the shelter-at-home orders that have been issued to control its effects, many businesses have experienced tremendous hardships as a result.

By now you have probably heard of some of the federal government’s efforts to help small business owners. There are several programs out there. The one that got my attention is the Payroll Protection Program (PPP) loan

I have been attempting to apply for this loan. I have experienced great amounts of frustration. But I had an enlightening conversation yesterday with a very highly positioned business banker. And I want to share the contents of that conversation with you today.

From what I understand, applications for the PPP will be accepted by and the proceeds disbursed through Small Business Administration (SBA) lenders. The SBA lenders will not be looking to the small business owner’s ability to repay. They will not be asking for collateral or guarantees from the small business owner. They will be looking to the SBA to guarantee the loan.

The commercial bank used by MacGregor Abstract, a New York title insurance agency, is an SBA lender. I have been waiting for over a week for their web site to be enhanced to accept these applications. I have also heard that other banks have been accepting applications. Some have already taken their limit. I am frustrated that I have not been able to apply with my bank

So, I contacted other SBA lenders. Each of them has told me that they will only deal with their existing customers – more frustrations.

Yesterday, I reached out to a contact of mine. They are senior management at a major bank in the Business Banking Department. I was thrilled that they took the time to speak with me. The content of that conversation was educational and comforting. And that is what I want to share with you today.

They personally consider this one of the greatest challenges of their career – to prepare to lend this kind of money, this quickly with this kind of security concerning the repayment of the loan. They are getting new information and further clarification from the SBA daily. And each time they do, they must amend their planned course of action. They MUST lend in compliance with the guarantee in order to know that they will be made whole.

They also shared their insights into what other big banks are doing. Although some are taking information, precious few of those loans are funding. They, too, are getting the same updated information concerning payback.

They also shared that some of the smaller banks have begun funding those loans – a very risky thing to do while the guarantee is still being clarified

I was concerned because one of the major banks has stopped taking applications because they reached their limit. Were other major banks ready to fund? Might they disburse so much money that it would threaten my position to get the same benefit? After I had this telephone conversation yesterday, I sat with comfort that:

1 – everyone is in pretty much the same place, and

2 – if we give them a little more time, it will probably work out just fine.