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R & R to most people means rest and relaxation. To first responders it means rescue and recovery. Rescue is when there is a chance to save a life. Recovery is when rescue doesn’t work and an all-out effort is unwarranted. Financial first responders during the COVID 19 pandemic utilized government guarantees. The Payroll Protection Program from the Small Business Administration program provided over $792,735,759,244 to help small business keep their employees on their payrolls. As of October 3rd, $561,265,371,888, PPP loans have been forgiven. Total number of borrowers were 11,492,065. The SBA also responded with Economic Injury Disaster Loans that so far has totaled $280,431,856,244. Number of borrowers for the EIDL program totaled 3,833,252 businesses. The SBA 7(a) loan program also responded with a guarantee increase to 90% of the loan amount as well as waiver of the guarantee fee. For the fiscal year ending September 30, 2021 the SBA 7(a) had a record year with total loan volume of $36,536,756,800. The beginning of a new SBA fiscal year on October 1st also meant the end of many of the SBA rescue efforts. Guarantee percentages for the SBA 7(a) program have reverted to pre-pandemic levels and guarantee fees have been re-imposed. The State of California Infrastructure and Economic Development Bank (IBank) has stepped up with recovery triage. Its flagship economic development tool, the Small Business Loan Guarantee Program (SBLGP) has increased its guaranteed portion from $1,000,000 to $2,500,000. With a maximum guaranteed portion of 80% and a guarantee fee on only 2.5% of the guaranteed portion, a SBLGP guarantee is cost effective and versatile for both lenders and borrowers. SBLGP versatility allows guarantees to be utilized for either term loans or lines of credit. Amortization can be based upon the cash flow of the borrower and not use of proceeds. Ineligible components can be included in financing packages with a proportionate reduction in the guarantee percentage. There is also a Disaster Relief Loan Guarantee Program available through IBank. Any business located in a DECLARED disaster area (COVID, wildfire, etc.) is eligible for a loan with a guarantee that could be high as 95%. In addition to being in a disaster area, the loan proceeds must be used to recover from significant actual physical damage or significant economic injury. At some point, R & R will once again mean rest and relaxation.
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