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Hackernoon logoPaycheck Protection Program Round 2: How to Get The Money by@lbilazarian

Paycheck Protection Program Round 2: How to Get The Money

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@lbilazarianLaura Bilazarian

Helping people get PPP loans @ sevencommas.com. Former Teamable co-founder, VC @Saastr & HIVE.

There’s another ~$300bn coming, but it will go fast.

Here’s what you can do.

This is your best strategy for next round if you’re a small business owner (<20 people) or get paid or pay most of your employees as 1099s.

Stats from the SBA on PPP loans approved last round.

1. Reach back out to your current bank. Ideally, you want to reach out to a person — a person who has loaned you money — either to your business or maybe helped with a mortgage in the past. See if you can get them to submit your app directly to e-tran (directly to the SBA). Ask them, directly, to do just that. If they only have an online portal, or won’t do it, submit the application, and move on to number 2 and 3 below.

2. Apply via a few fintechs that you feel the best about. We were able to get loans as 1099 contractors via Lendio last round, so we partnered with them to help get the word out — see below. Click here to apply via our partnership (we receive a small fee only if you get approved for a loan through them). They are especially good for funding 1099 contractors. Tell your 1099 contractors to apply too.

3. Apply via a community bank/lender. Specifically, one with $50 — $10bn in assets and one with less than $10bn in assets. 

Wait, what? Why? and how?

The reason is simple. There’s a backlog of big bank and fintech loan applications being collected.

When the SBA opens the program after receiving additional funding, they will rip through that $240bn in days at most.

Wait, why $240bn? I thought it was $300bn? 

That’s exactly it — remember the republicans complaining the dems were holding up the bill? Well, one of the things they fought for is this:

Basically page 5 and 6 of the Senate bill carve out $30bn both for financial institutions with $10 — $50bn in assets and those with less than $10bn in assets — you can read it for yourself, here.

Too painful to read? It just says there’s $30bn set aside for institutions with assets $10 — $50bn, and $30bn set aside for institutions with less than $10bn.

So, that means community banks/lenders will move quickly from being unable to fund to one of your best chances at getting your loan approved.

Okay Laura, sounds like a good plan. But how the heck will I ever find one of these institutions?

That’s where we can be helpful again. We heard about this via twitter over the last week, and so we found lists of all these lenders and emailed a bunch of them to see who was willing and able to take on new customers for the next tranche. We put the ones who responded and seemed truly able to help in a lender finder tool on our website which you can find here:

https://www.sevencommas.com/find-a-lender

It’s a really simple tool that just matches you to lenders by your geography, loan size, and business type. It takes ~3 minutes to fill out. It’s free, and we make no money on the matches. (Again, our only paid referral partner is Lendio who approved two of our 1099 contractor loans last round.)

We are also sharing the lists we’ve gathered over this process with contact information and other useful information on all these lenders. You can find them here:

SBA PPP Lenders (per the find-a-lender tool) — with contact information that the SBA removed after putting it up for one day. You can try to find it on their site instead, here.List of CDFIs with contact information — these are community focused lenders who, for the most part, do not take deposits. They might have other programs to help too.

If you want to skip the effort and just find a lender in your region, you can just use our free lender match tool.

We emailed them all this weekend.

CDFIs willing and able to take the call.

Here’s what we did.

I was able to help 5 out of 5 small business and 1099 contractors loans get approved last round, but it took every single ounce of effort and everything I had ever learned on wall street and as a 3x entrepreneur to do so.

Trying to save you a few cycles here. (See the next section for more information about what went into devising this strategy and finding the right partners.)

Check out the summary of how we made it happen.

4 minute video summarizing the latest news on PPP and strategies to get a loan.

Oh and of course, all of this is subject to change based on the whims of congress, the SBA, your bank, the treasury, etc…

…but as of Thursday, April 23, this is the best I’ve got.

Follow me on twitter for the latest.

The latest Tweets from Laura Bilazarian (@LauraBilazarian). Helping people get PPP loans @ https://t.co/OOx5ek7xxp 3x…twitter.com

Here’s how I came up with a strategy that worked.

There’s a sea of information on this stuff, and it’s pretty hard to detangle.

I haven’t stayed up for 60 hours straight working on something since I was a wide-eyed 23 yo on Wall Street — and that was to pay off my student loans. This time, it’s been to get small businesses (aka those with 1–20 people that have no other financing options) forgivable loans to keep their workers on payroll and to put a cork in unemployment.

By the numbers, we as a nation, and I as an entrepreneur, have already failed. Seeing a massive percentage of the population lose their jobs with no protection (a whopping 26m unemployment claims) is unacceptable for any country — nevermind the most developed and innovative nation in the world. Still, I had to keep going…

I jumped in on PPP four weeks ago when the CARES Act was still being debated on the senate floor because I truly saw it as the one potential economic ray of light for a small businesses who employ ~50% of Americans.

At least 50% of these small businesses couldn’t get a loan in the best of times, nevermind amidst a pandemic and subsequently crashing economy.

And on average, small businesses only have 27 days of cash on hand for expenses meaning the COVID closures clock was already ticking…

I feared that the smallest companies wouldn’t be able to figure out how to do the application without huge legal and accounting expense and would be ignored by their banks.

We built this calculator to help with preparing your application properly, but the fact that almost no banks would take new customers and only ~4,000 out of 13,000 financial institution was ultimately a bigger problem.

I got on the phone immediately with mid-sized and large banks to see how they planned to approach the situation. They essentially laughed the whole program off and said they wouldn’t be participating — the SBA was a joke in their eyes. I was furious.

So I called, emailed, and even walked into the brick-and-mortar offices of community banks and SBA lenders. Most of them had no idea what I was talking about at the time.

The walk-ins were particularly disappointing because they took me back to a place I haven’t been in a long time — they treated me like I wasn’t worth their time because I was a woman, because I wasn’t dressed in a suit, and because I only had a small amount in my current startup’s bank account.

This was ultimately a good thing because it fueled my fire — reminding me how differently financiers treat me now v before I raised from top venture capital funds in my last company

Getting ignored or treated poorly is 99% of small business owners’ experiences with banks and fundraising.

All except one community bank said they’d only be serving current customers. I pressed hard, pounding the table on the need for all of us to stop unemployment, and they admitted they just didn’t have the human power to review the applications. 

As a tech entrepreneur, this human bottleneck with the clock ticking was unacceptable.

So I turned to fintechs. One fintech — Plaid — was offering a literally free solution to the banks — but still, the fragmentation and lack of tech sophistication in most community banks, and the lack of capital to make loans ended up being insurmountable. Even if we could make everything tech magic, data needed to be manually entered into SBA’s e-tran anyway.

I called hedge funds to find capital for these community and online banks. They were willing to do it (I think because they can’t stand the thought of a restaurant-less NYC), but then the fed stepped in with its secondary facility — the fintechs and local CDFIs still couldn’t access any funding.

As exacerbating as everything was, the message I understood is that this is a temporary program for the types of customers most banks would rather not have anyway.

So we had fintechs who could take applications quickly and properly but not fund them, community banks who couldn’t even manually process their current customers, CDFIs who wanted to help but couldn’t process applications or fund the loans, big banks who would rather spend time giving loans to their big customers outside of this program and were only participating for PR reasons (or because their big customers wanted “$10m free money”), and wall street - who would rather buy Cruise Ship debt that would be bailed out by the government than make a secondary market for these low 1% loans.

And unemployment at 17m.

I decided to email every lender in the SBA finder tool. You can get their contacts which they’ve since removed from the tool here.

At first I made the mistake of asking if we could help small businesses (for free on my end of course). Barely 8% even responded after multiple emails, and all but one said current customers only.

Every bank in SBA finder tool not taking applications or only from current customers. Note the SBA removed contact information from their finder tool but you can get it in our googledoc above.

After a week of banging my head against walls, I thought, let’s change gears and think like a banker. So I emailed saying I have $1M in the bank to transfer over and $100k for my personal account as a contractor. 

Unsurprisingly, I got a 28% percent response rate with this approach v 8% without the mention, and actually had bankers calling me. Most dropped off however after I told them I only have a few employees and was mostly looking for my 1099 business. Some even called and asked me to screenshot the money I would transfer!

So here I was. I had built a website to help others, been on the news, read every single document on the SBA and Treasury’s website multiple times, emailed with 1000s of lenders and had phone calls with dozen lenders and fintechs, spoke to the guy who wrote the original bill, and still I had nowhere to even submit my own applications for my wife’s, my customers', or even my own, businesses.

I decided to submit an application at every lender possible - partly because money was running out and my wife and customers and me would consider me an abject failure if I spent 300 hours over 3 weeks on something, and I wasn’t able to even get the $9k — $60k each of us were eligible for to pay our workers. And partly to find out who could actually deliver to share with others.

I submitted at every fintech, even the ones I had been yelling at on twitter who were unethically collecting credit scores. I tried to submit at the few community lenders who were willing to work with me but those manual processes always fell apart before submitting.

My own bank, after several false starts, finally got their application up the day before funds were projected to run out so I submitted there. When they came back to me two days later with questions about my calculations, I literally screenshotted the part of the Treasury FAQ saying they only needed a payroll report I had memorized to get them to submit. Same thing for my customers whose calculations they also wanted to verify but they were a day later so I felt sick at failing them for 24 hours after the money had run out and there was no word from our bank.

I’m not sure what others who hadn’t spent 7 years on wall street reading these types of documents and fighting with bankers did with these types of requests from lenders. It also helped that I had a banker I could email when hitting roadblocks who had my back from my last company where I raised $10m. I’m sure I would have been ignored otherwise.

Ultimately we were able to get all loans approved, literally on the last day of funding.

None of the fintechs, except one, delivered. So we partnered with them for referrals. We believe from our experience and tests and of course data that they are especially good at smaller and 1099/sole proprietor loans. They got 70,000 through to lenders in the last round for an average of $87,000 which is a smaller average loan size than most other banks. If you apply through our link and get approved, we will get a small commission. This is the only money we will get from all our efforts. We encourage you to try that but also submit with a community lender for the reasons highlighted below.

But we didn’t stop there; we messaged every single community lender with a carve-out for the next round and made a tool to help match you to the ones who can take your loans. We did this for free to stop unemployment and have no referral fee with any of them. www.sevencommas.com/find-a-lender

We also made our list of contact information openly available so you can find SBA PPP lenders near you and send an email making the case to take your business like I did above. We think this is worth your time because who knows how fast that next $300bn will go, but my guess is it will be slower than that $60bn carveout for community banks.

Please tell us your story in the comments or on Twitter

This whole thing has incensed us and something big, a bank that actually serves the 99%, is coming when this stops. 

Please let us know how the financial system could better serve you. And let’s have a virtual toast when you make your first payroll with these loans!

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@lbilazarianLaura Bilazarian

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Helping people get PPP loans @ sevencommas.com. Former Teamable co-founder, VC @Saastr & HIVE.

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