Interview with Lendio Founder and CEO Brock Blake on the SBA Paycheck Protection Program
Brock sheds light from the lender side. What tips does he have for business owners?
Ezra Wolfgang, a publisher with Finder’s loans team, talked with Brock Blake, founder and CEO of the digital lending marketplace Lendio, about what to expect when applying for the SBA Paycheck Protection Program. This interview is edited for length and clarity.
How long does it take for a Paycheck Protection Loan application to be reviewed — and either rejected or approved?
The application process is actually quite simple: Business owners can go through the application in about 15 minutes as long as they have all the proper documentation, which includes front and back [copies of your] driver’s license or passport and your payroll documentation. Ideally, that’d be a quarterly tax filing. Then you go through the full PPP application, like we have online or others that you can submit through banks.
Once you get the full application, the only lenders that are approved for the PPP loans today are SBA-licensed lenders. And not every bank that you work with is an SBA-licensed lender, although a lot of people think that’s the case.
Some lenders are high-volume — you know, nonbank, SBA lenders. They can do a lot of transactions. Others are small community banks, and they’ve never done an SBA loan. So they’re setting up systems and processing and E-Tran [electronic loan processing], and all these different things.
I had a call this morning with a bank president: It was not going to be up and running and ready to take any applications until next week, even if you submitted it to a loan officer. So it varies by lender.
Let me just walk you through the process. You need to submit the application to the SBA through what’s called E-Tran. The speed of E-Tran is not the fastest technology in the world, and it makes some people frustrated with the process. But once they’ve submitted to the SBA, then the SBA gives them back what’s called the PLP number — a confirmation number that essentially says you’re approved.
Once you get that PLP number, then it’s back in the bank’s hands. The bank needs to be able to get confirmation from the SBA and work on all the closing docs, so there’s a promissory note. Some of those lenders are, again, starting from scratch. The SBA didn’t guide them with “Here’s the exact closing docs you need to use.”
The first loan takes the longest. Once you fund one, then it will speed up. Once the bank gets the PLP number, they have 10 days in which they have to fund the deal.
Hopefully it happens faster than that. Some of our banks are moving quite rapidly in their funding deals. Others are a little bit slower in their systems and processing.
So if you could give us a range, what would it be? For instance, what would be “a short one”?
Short — I would say three business days. Long would probably be like 13 business days. Once they have their PLP number, most banks are moving fairly quickly from there, in a matter of a couple of days.
Here’s the challenge that not too many people are talking about. As I mentioned, only SBA lenders are licensed to fund these loans. So you may have banked with a bank for 20 years and realized today, they were not an SBA lender. That wasn’t part of your criteria when selecting the bank 10 or 20 years ago.
So you go to your own bank to apply for the loan, and they’re not approved to fund this loan. And they say, “Well, go to someone else that’s approved.” So you go to another bank that’s approved, and what you realize is that since there’s only a few SBA banks approved, they’re getting all the volume in the US. And they’re completely overwhelmed with applications, and that’s slowing down the process.
So what they start doing is prioritizing. They prioritize based off of, “I’m only going to fund customers that I already have a loan with.” Or maybe, “I’m only gonna fund customers that I already have a relationship with, that are banking with me.” So that means if you don’t bank with them, you’re at a disadvantage, which actually is quite frustrating.
I don’t think that’s the intent of the program. And business owners right now are getting put at the back of the line just because, 10 years ago, they selected a bank that wasn’t an SBA lender.
That’s my biggest concern right now. As of yesterday, there were 440,000 businesses that had been funded. And that sounds like a huge number, but there’s 30 million businesses in America. So 1.5% of all businesses have actually got a loan, while 99% are sitting on the sidelines right now, saying, “When am I gonna get my loan?”
Right. And what do you think about Congress and the SBA plan to extend this loan to be available through non-SBA lenders?
They’re doing and saying all the right things. It’s just a matter of time, the speed. So right now, that’s what’s happening. Nonbank SBA lenders — or non-SBA lenders, banks and credit unions and fintechs — now have an application to submit to the SBA and Treasury.
None of them have been approved yet. We hope that happens any day.
And are there any lenders in your network that are taking measures to speed up turnaround times for people applying for this new loan?
Yeah, every lender is. I mean, their goal is to process as many SBA applications as they can, so many lenders are trying to set up a DocuSign process to get the signatures more efficiently.
But community banks aren’t set up to do high-volume transactions. That’s just not their super power. Their super power is helping small businesses do large transactions. You know, a few loans a month. And now they’re being asked to do 500, 1,000, 5,000 loans, and they don’t have the systems, processes, the tools, the people in place to do that.
Can you name a few examples of lenders that are trying to speed up funding times for their customers that are applying?
We have over 300 financial institutions that are participating in this program — banks and credit unions.
People’s Bank of Alabama has been funding a bunch of loans, but they’re focused right now on their customers. I’d have to pull up a list of all the different banks we have. Wilson Bank and Trust is a bank in Oklahoma that’s funding a bunch of deals. Ready Capital is funding loans. You know, there’s 200 of them. Those three are probably going to get bombarded by customers all of a sudden, because I mentioned their name, but there’s quite a few.
The intent for most banks that we work with, they’re trying to increase the speed in which their processing is done.
Is there any specific information or documentation that applicants can provide to boost their chances of getting approved? And, likewise, what should they avoid doing in their application to prevent getting rejected?
We put up some content on our site around what a fully completed application looks like. The more documentation you have, that’s gonna help that banker. When they’re reviewing that file, they’re able to say, “Yep, this is good to go, let’s process it.” The last thing that you want is that they get the file and they realize that you’re missing something. You don’t have a picture of the back of your driver’s license, and they have to send it back, and now you’re starting all over again.
Make sure you’re thorough in your application process so when you get that opportunity, it’ll be fully approved.
My final question for you: Are borrowers able to apply for a PPP at a second lender while approval is pending at the first place they applied to?
Yep, you can apply for a loan in multiple places. Just know that you can’t get two loans, and whoever processes that application first with the SBA will get that PLP number — and reserve that you basically need funds through them.
Let’s say you submitted to two lenders. If the second lender goes and submits your file to the SBA, they’ll be rejected.
At Lendio, we’re doing everything we can to accelerate the loan approval and funding process as much as possible.