Financial institutions are gearing up for an influx of loan applications due to the Paycheck Protection Program (PPP), which could begin seeing applications as soon as Friday, April 3. In addition to existing SBA 7(a) lenders, all federally insured depository institutions and federally insured credit unions are automatically eligible right now to participate in PPPs. Just 1,700 financial institutions are certified SBA 7(a) lenders, however, leaving many financial institutions confused about the process and SBA buzzwords involved.
A key part of applying for a loan is actually submitting a loan. It is important to remember that the SBA doesn’t fund the loans. Rather, it guarantees up to 85% of loans through partnering lenders and institutions (Note: the agency is guaranteeing 100% of the loan under the Paycheck Protection Program). When a partner lender is ready to submit loan guaranty packages and loan servicing request packages, it does so through the SBA’s online portal, E-Tran.