GWBC Radio: SBA District Director Terri Denison

Intro: [00:00:05] Broadcasting live from the Business RadioX studios in Atlanta, Georgia, it’s time for GWBC Radio: Conversations to Grow Your Business. Now, here’s your host, Roz Lewis.

Lee Kantor: [00:00:25] This is Lee Kantor with Roz Lewis. This is another episode of GWBC Radio: Conversations to Grow Your Business. I got with me today Roz Lewis. And a little later, we’ll have Terri Denison with the SBA on. But Roz, before we get too far into things, tell us about what’s been happening under these trying times at GWBC.

Roz Lewis: [00:00:43] Well, thank you, Lee and Stone. One of the things we are doing is trying to get information out to our constituency as everyone is facing this coronavirus, COVID-19 pandemic. And this, of course, is so unprecedented. As a matter of fact, we’re going to be launching a special web page on our website this afternoon providing more information that each of our WBEs or small businesses, if you come to our site, will be able to get information on how to deal with this challenge that you’re facing. It’s samples of financial assistance, as we’re going to be talking about today on the show with Terri Denison of SBA. But more importantly, other information, how your employees are dealing it, with how to deal with your employees as it relates to virtual working environments. We’re also going to have a feed from the CDC, as well as the World Health Organization.

Roz Lewis: [00:01:47] So, I’ll mention that a little bit more as a reminder to our listening audience, but we encourage you to go to our website at gwbc.org to find out more information that, hopefully, is going to help you, including how our leaders can kill in order for them to make good decisions. And I know this is a tough time, and you’re very excited about how you’re going to continue to sustain your business. But it’s also important that you take a moment to relax too in order to be able to make those good decisions as leaders.

Lee Kantor: [00:02:24] On this show, we’re going to be covering in the upcoming episode some of the specific strategies and bringing on some of the GWBC folks that are experts in a variety of topics that can help WBE thrive during this time as well, right?

Roz Lewis: [00:02:40] Absolutely. You’re absolutely right. It is important that we do bring you good information. And that’s one of the things I want to share with everyone is that is the purpose of Business RadioX, to bring you good information, good news. I know you hear so many other news that could be daunting for you, but at the same time, we’re focused about business, how we can continue to strive. Remember, we are a strong community. We haven’t been through this before as a country and we will survive this. But how do we make sure we put the right resources in place in order to do that? And that is why we here at Business RadioX and GWBC have partnered in order to bring you that information. So, Lee, are you ready to get started with Terri?

Lee Kantor: [00:03:32] Absolutely. Why don’t you introduce Terri?

Roz Lewis: [00:03:35] Terri, please provide us an overview about the SBA for our listening audience, because some people, believe it or not, are just not familiar with who the Small Business Administration is.

Terri Denison: [00:03:46] Good afternoon, everyone. And thank you, Roz, for having me on the show today. The US Small Business Administration or SBA, we’re a federal government agency, been around since 1953. And in a nutshell, our mission and purpose is to support the US economy by helping foster the creation and growth of small businesses. We do this in a variety of ways. We have programs to support capital access for small businesses. We have resources to help them with business education, and counseling, and then tools to help them enter the federal contracting market if they want to pursue that business opportunity.

Terri Denison: [00:04:29] And we also, as an agency, assist small businesses in times of disaster. Of course, with the coronavirus or COVID-19 barred in the situation that we find ourselves in economically, one of the things that the federal government has made available for this particular time is our economic injury disaster loans. This is not a new program. It’s a program that we have used along with some of our other disaster assistance programs, usually, in the time of a natural disaster like tornadoes, hurricanes, et cetera. Sometimes, it could be person-created as well if you’re an area that has been affected by civil disturbance or in the case of 9/11, we did offer those economic injury loans because of the downturn businesses were feeling, especially in the DC and New York area. So, this is the tool that we are using and trying to adapt to deal with the current challenge that we find ourselves in with the coronavirus.

Lee Kantor: [00:05:39] What qualifies a person to be eligible for this loan? Do they have to have … do they have to use the loan? And what qualifications do they need to even apply for the loan?

Terri Denison: [00:05:50] Well, the economic injury disaster loan is used basically to help a business cover its financial obligations expenses in the face of losing revenue, losing customers because, in this case, the social distancing policies that are being put in place in response to the coronavirus. These loans are for up to $2 million. And they’re a direct loan from SBA. Normally, we go through commercial lenders to make loans, and then we guarantee those loans. This is actually a direct loan from the SBA for those purposes.

Terri Denison: [00:06:29] Because of the situation, we’re a little more relaxed in how we view the qualifications, as opposed to with our traditional commercial loans. Basically, we’re going to look at what the business was doing, how it was performing prior to the disaster. In this case, we were considering January 30, 2020 as the start of this crisis. And so, businesses can look at what they did, say, six months prior to this and compare it to the same period last year, the year before. And if there had been a loss or significant decrease, then that would be a situation that would qualify that business for our disaster loan.

Lee Kantor: [00:07:15] We’re talking primarily, like, obviously, this show is based in Atlanta, Georgia. Are these loans available now for folks in Georgia?

Terri Denison: [00:07:23] Yes, they are. They became available as of late yesterday. They are available. You can apply. We encourage people to apply on the online portal at sba.gov because that’s a much more quick way to get the loans through the process. There is a paper application option, but those do tend to be not received. The priority that they are online. So, I encourage people, apply online.

Lee Kantor: [00:07:53] And then, how do you determine the loan sizes? Like is there a minimum? Like, let’s say they only need … They don’t need $2 million, they need $50,000. Does the person applying decide how much they’d like or is the SBA say, “This is how much we have available for you”?

Terri Denison: [00:08:08] It’s probably a little combination of both, but more weight being put on what the business owner indicates that they need. Of course, what SBA will look at is what the historical performance of that business was and compared to the period that we’re in now. And that, along with what the business owner is telling us, will determine what that loan amount is. There is a possibility to go back and request additional funds if, God forbid, this goes no longer. There is a mechanism for doing that.

Lee Kantor: [00:08:46] Some of the listeners here have relationships with the SBDC. Does the SBDC help a company go through the loan process, or you don’t have to have a previous relationship with the SBA in order to apply for these loans?

Terri Denison: [00:09:00] No. You do not have to have a pre-established relationship with SBA. In fact, a lot of times that’s how businesses are introduced to the SBA when they encounter a disaster and go to come to us for disaster assistance. Thank you for mentioning the Small Business Development Centers, which is a resource partner of ours. We partner with the University of Georgia. They provide free one-on-one consultation and technical assistance. And they have specifically told us that they’re ready to assist small businesses with the paperwork and working through the application process.

Terri Denison: [00:09:40] Same with SCORE, a volunteer partner organization, Women Business Centers, and our district office staff as well. So, we’re trying to bring on a lot of resource partisan multiple stakeholders into this process helping them to understand it, so that they can work with their constituencies.

Lee Kantor: [00:10:00] Now, these small business people out there that are dealing with these loan applications, is this something that they have to worry about, kind of, personally guaranteeing or putting up like their house for collateral or worry about their credit scores? Like how much of that comes into play when it comes to applying and getting these loans?

Terri Denison: [00:10:22] Okay. I think, with the disaster assistance loan, it’s a little more relaxed. Well, for example, we don’t have a minimum credit score. SBA tends to look at cash flow as a main, I guess, determinant of whether or not to provide a loan. They’ll look at the historical data prior to the disaster. And if that business was doing fairly well, there’s a pretty good chance they’re going to get that loan. If the borrower or the individual, rather, the owners, if their credit, maybe it’s borderline, maybe in the 600s, that doesn’t necessarily kick them out. Because of the nature of these loans, we’re really trying to provide them to the broadest number of businesses possible. So, if you have a ding, it probably will not impact you. If it was really bad, not so much. And the one thing I do want to emphasize is that if the business wasn’t doing well before this crisis, then this particular loan program is not going to help address that.

Lee Kantor: [00:11:40] Now-

Terri Denison: [00:11:40] The purpose of the disaster assistance loan is to kind of help people maintain where they were prior to the disaster.

Lee Kantor: [00:11:49] Now, Roz, what are you thinking about this? This is a lot of great information for the GWBC folks, right?

Roz Lewis: [00:11:58] Yes. And one of the things, Terri, I want to kind of go back to some of the comments that you made already for our listening audience, because they are broad and vast, they literally go beyond our region, which we’re very excited to have them, can you talk about the fact that, yes, there are other small business development centers? Of course, your organization’s aligned with the one here in Georgia with the universities here. But what about the other states? Because we cover North Carolina, South Carolina. And I’m pretty sure there’s people listening from all over the country to this and to make sure that they know there’s someone local there for them.

Terri Denison: [00:12:42] Sure. The Small Business Development Center Program is a national program. So, there’s going to be, at least, one Small Business Development Center network in your state. In some of the larger state, there may even be more than one network. So, for North Carolina, South Carolina, for example, they each have Small Business Development Centers, as well as SCORE chapters where the SCORE volunteer business people can assist with this process.

Lee Kantor: [00:13:15] Now-.

Terri Denison: [00:13:15] So, we encourage you all to-.

Roz Lewis: [00:13:16] And are they mostly at universities?

Terri Denison: [00:13:20] They are. They are primarily at universities. A few that have been grandfathered in that have other affiliations. But pretty much all of them are required to be connected to an institution of higher learning.

Lee Kantor: [00:13:36] And we use SBDC here to help us grow the Business RadioX network. We work with Paul Wilson out of the University of Georgia, I think Georgia state office here in Atlanta. And it’s a tremendous value to us, a great resource has helped us on multiple fronts, just from strategically thinking about the business and helping us kind of leverage the resources that are available. And that’s the thing. A lot of business owners don’t realize how many resources are available to the small business. They don’t have to do this alone. Running a business is hard enough. You don’t have to do this alone. There’s so many resources. And the SBA provides just a great number of resources to help a business not only just exist but to thrive and grow. So, we appreciate everything the SBA is doing.

Lee Kantor: [00:14:29] And this is another example about how our tax dollars are at work, helping the small to mid-sized business grow. I mean, this is not just something that is kind of a nice-to-have. This is a must-have, especially during these crisis situations. So, we appreciate everything that you’re doing, Terri. And Roz, we appreciate you helping make people aware of this. And if you want to introduce yourself to the SBA, this is a perfect time to do this. Like you said, this is a crisis. And people that have businesses that are vulnerable need to know about this loan opportunity because this could be a make or break thing for a lot of business owners.

Roz Lewis: [00:15:13] Yes. And I would add also, Terri, to expand on the fact that SBA partners with so many other organizations, they are women’s business development centers that are also out there of which they partner with to bring these resources to our small businesses. Now, you talked about SCORE. And, that’s an acronym. So, kind of expand on that a little bit too, so that our audience understands what SCORE is. And as Lee has mentioned, the tax dollars have already paid for these resources that are available to you. And so, they’re just not the superhero that come in at the time of a disaster to help you, but they’re there day in and day out to assist you with growing your business. So, can you expand on SCORE?

Terri Denison: [00:16:09] Sure. SCORE, it used to stand for a Service Corps of Retired Executives. It’s the volunteer organization of mainly retired business people but can, actually, now, include active business persons because it’s no longer limited to retired persons. SCORE is simply now SCORE. Like KFC to be Kentucky Fried Chicken. Now, it’s just KFC. Kind of the same thought to that. So, our SCORE volunteers, because they’ve been in the trenches, and in some cases, they’re still in the trenches as business people, use that knowledge to share and pass on to prospective and current business owners, so that they don’t make the same mistakes that maybe those volunteers made early on in their business careers. And we can help those businesses move along even further without encountering some of those downfalls. And their counseling is free. They also provide training. Some of it’s free. Some of it is low cost, just to cover the cost of the training on a variety of business subjects, not only to start a business, but once you’ve started the business, what are the things you need to do to continue to grow that business and increase capacity?

Roz Lewis: [00:17:34] Well, thank you because I think that is key and important of understanding how I read once, “There are enough mistakes that have been made, we don’t need to create new ones.” And this particular arm of SBA with the SCORE team are experienced business people who have been there, done it, tried it; and yet, they are there and available to expand that knowledge to help you all grow your businesses and not make the same mistakes. And granted, there are going to be some mistakes made but not to that extent.

Roz Lewis: [00:18:14] Let me ask you about this, kind of getting back to this disaster loan program that you all … we all know cash is queen, right? And of course, some people say king, but cash is queen. And what’s the timeline for these loan approvals from the submitting of the application because time is of the essence of people looking at their payrolls? They are looking at trying to pay the bills.

Terri Denison: [00:18:44] I was just on a training call with our disaster operations here, which is also located here in Atlanta for the eastern half the United States, and they tell us that the time frame would be 14 to 21 days to get to approval of the loan. And then, the borrower will, of course, need to complete and do some things on the back end for the loan closing. And then, that’s when the disbursement of funds would occur.

Roz Lewis: [00:19:20] And there’s this loan closing in person? Is everything going to be conducted online?

Terri Denison: [00:19:27] It has done virtually. There would be certain instructions that the borrower is given because they’ll be provided with the loan authorization and some of the other closing documents and a checklist of what they need to do to make that happen. But it’s not formal like we maybe were used to where everybody sits at the table, and there’s attorneys. And it’s much simpler and not in-person.

Lee Kantor: [00:19:57] And then, can you-

Roz Lewis: [00:19:58] Thank goodness for docusign, huh? Sorry, Lee.

Terri Denison: [00:20:01] Yeah.

Lee Kantor: [00:20:02] Now, what about the repayment of the loan? What are the interest terms? And then, how quickly is it? Is there any kind of starting pay? Do you immediately begin repaying the loan or like how does that work?

Terri Denison: [00:20:18] Yeah. Well, the good news is because these are disaster loans, there’s a lot more flexibility with that as opposed to maybe more conventional loan guarantee programs. They have up to 30 years to repay the loan. That’s for amortization purposes that let those monthly payments can be low. There’s no prepayment penalty. So, once we get through this, things pick up, maybe the business even grows beyond where they were before the disaster. They can take that debt out and pay it off without penalty. Normally, there is a four-month period where the payment is not required. And I know that our Office of Disaster Assistance is looking, in this particular instance, maybe even extending that period before the business would have to start looking at repaying the loan.

Lee Kantor: [00:21:20] And then, the interest rate?

Roz Lewis: [00:21:21] But currently, you’re saying four months. I want, at least, the audience to hear that. So, there’s a four-month-

Terri Denison: [00:21:26] Yeah, yeah. Yeah, a minimum of four months where you wouldn’t have to pay before you actually started the repayment process. And as I mentioned, because of that, given our situation in this particular case, I think we are looking at possibly extending that, but it won’t be before four months.

Lee Kantor: [00:21:46] And then, interest rates?

Terri Denison: [00:21:48] Yeah. Currently, this is a fixed rate set by statute, a statutory formula. Currently, it is 3.75% for small businesses. And actually, non-profits are eligible for this particular loan, which is a departure from our usual policy. Their rate is 2.75%. I know that there has been some feedback and concern about the current 3.75% interest rate for small businesses because, of course, the Fed has dropped the interest rate. And I think that’s information that we have fed back up to our folks in Washington to see if there’s a way that can be addressed. But that’s what it is at this particular time.

Lee Kantor: [00:22:40] And then, is there-

Roz Lewis: [00:22:40] So, depending upon your closing. Sorry, Lee.

Lee Kantor: [00:22:44] No, go ahead, Roz. Go ahead, Roz.

Roz Lewis: [00:22:46] Sorry about that. Yeah, because this is exciting information, right? So, depending upon your closing date as to what that interest rate may be. Even though, right now, the base rate is 3.75%, but given the fact that you all have already addressed this and according to with the Federal Reserve has lowered the rate that could change. And will it just depend upon your closing date, or will they consider lowering that rate to whatever the final rate will be?

Terri Denison: [00:23:24] That part, because this hasn’t actually been done, I’m not certain on how to answer that. Usually, you look at interest at the time of application. I know with our regular loan programs, we do that. But I can say that I think we’ve been getting this feedback quite a bit about the fact that it’s higher compared to what the market rate is. And so, hopefully, we’re able to do something because it is set by statute. So, it’s harder to waive statute than an internal policy guideline or regulation. So, that’s something we’ll have to stay tuned on.

Lee Kantor: [00:24:15] Now, we’re-

Terri Denison: [00:24:15] So, we want everybody to know, we hear you.

Lee Kantor: [00:24:18] Now, we’re talking a lot about the disaster assistance loan program, but the SBA has a variety of other loan programs as well. Are those loan programs going as normal?

Terri Denison: [00:24:29] Yes, they are. And in fact, for individual businesses that have already obtained an SBA backed loan, either with one of our loan guarantee programs, we always had a provision where lenders can have some flexibility to defer payments or offer interest-only payments for a certain period of time to help a business, whether a temporary situation. So, we’ve really been encouraging our lenders, once again, of their authority to do that. They don’t even have to ask us in most cases to do this. They can do it unilaterally. And deferments, for example, could be up to six months.

Lee Kantor: [00:25:17] Now, if you were a small business person, how would you advise them about going through this process? Is this something that all they just have to do is to just go to the website and then everything is there, or how would you recommend them moving forward if they want more information or want to pursue this disaster assistance loan program?

Terri Denison: [00:25:39] Oh, sure. There’s several ways to do this. First, I would, in fact, encourage them to go to the website, sba.gov/disaster, because there is more detailed information about the program. And then, they can look at the online application. There’s kind of step-by-step notes on how to go about completing the application online. If they need additional assistance, there also are disaster assistance customer service center, and they’re at 800-659-2955. They’re there seven days a week to help borrowers work through the application process. They can also e-mail if they have questions to disastercustomerservice@sba.gov.

Lee Kantor: [00:26:46] Now, Roz, you mentioned some resources for the GWBC folks. Is there anything that you’re doing to help them kind of connect with the SBA right now?

Roz Lewis: [00:26:56] Yes, as a matter of fact, that web page that we are creating is literally the purpose of it is to be a one-stop shop for our constituency to be able to get information about financial resources, about business resources, health resources, so that you can just go to that page. And it’s at gwbc.org. But one of the things I want to reiterate, because Terri mentioned, she threw out a lot of information about numbers of contact, just remember, and I’m pretty sure the lines are going to be jammed, but still you never give up. That’s why you’re in business, and that you are the businesses that you are. It’s 1-800-659-2955 for Disaster Relief Assistance from SBA. And of course, the email address is disastercustomerservice@sba.gov.

Roz Lewis: [00:26:56] But we are encouraging you to definitely get engage. This may be the reason that you are becoming familiar. This situation may be the reason that you’re becoming familiar with the Small Business Administration. Don’t let it be the only reason that you’re becoming familiar with SBA. Meaning, you will continue to utilize their services that they’re providing. Terri, there are other loan programs that are also beneficial for our small businesses because I’m pretty sure, as you mentioned, there are qualifiers there for this particular loan out there. They’re pretty relaxed, but can you talk about a little bit about what the other loan programs are real quickly-

Terri Denison: [00:28:54] Sure.

Roz Lewis: [00:28:55] … before we close out.

Terri Denison: [00:28:56] Sure. We have our biggest loan guarantee program. We call it the 7A Loan Program. But you can guarantee loans up to $5 million with that or SBA can. You can use the proceeds for a variety of purposes – working capital machinery, equipment, inventory. In some cases, you can use it to refinance existing business debt, commercial real estate. We also have a program call our 504 Loan Program. It focuses on fixed asset financing. So, commercial real estate, what I call long life machinery and equipment like production equipment. It could be used to acquire those type of assets or refinance debt related to those types of assets. What’s great about 504 is that it’s a fixed rate, and the rate is tied to the Treasury rate as opposed to prime. So, it tends to be lower than a conventional loan. And then, we have our Micro Loan Program for businesses that only need small amounts of capital. And those loans go up to $50,000. And those are delivered by our participating community development financial institutions that we have approved to make those loans.

Roz Lewis: [00:30:24] Wow. So, you understand that there’s quite a bit of opportunity there for you all financially to help support your business because, once again, cash is queen and king for the businesses and the lifeblood is what I always say of any business in order for them to scale and grow. So, Lee, I would say once again, please visit our website at gwbc.org for more information. We are here to help you. And we are going to get through this, we are going to see the other side of this, and we are going to come out stronger. And I like to say a parting thought real quick is that, “You never know how strong you are until strong is the only choice that you have.” And that was by Kayla Mills, a quote by Kayla Mills. But I want to thank Terri Denison so much for taking time out. I know you’re on several top shows and events to bring this information to people, and we really appreciate you taking time to be with us today.

Terri Denison: [00:31:45] My pleasure.

Roz Lewis: [00:31:47] Lee?

Lee Kantor: [00:31:47] Well, thank you both for being part of the show today. Roz, thank you and for your leadership at GWBC. It’s important work that you’re doing to help the women-owned businesses know the truth and find out where the reliable sources are. And we try our hardest to be one of those sources with you. And Terri, your work at SBA is going to be critical as we get through this trying time. So, one more time, the website for that application for the loan, because I think you guys are going to be overwhelmed by people taking advantage of this. And if they’re not taking advantage, that’s on them. I mean, all you could do is provide the opportunity. So, one more time, Terri, that website if somebody wants to apply for this disaster loan?

Terri Denison: [00:32:31] www.sba.gov/disaster.

Lee Kantor: [00:32:38] Everybody, please take a moment, go to that website, and put your application in. A lot of businesses are going to be vulnerable during this time, but don’t forget, a lot of the greatest businesses are developed during trying times. And yours could be one of them. And we will keep you up to date with a lot of resources and information as we move forward. This is Lee Kantor for Stone Payton and Roz Lewis. We will see you all next time on the GWBC Radio.