Episode•June 19, 2021•24 min

Small Business Financing with Anna Serio | Ep. 61

Tiffany sits down with Anna Serio to discuss everything you need to know about successfully running a small business in the midst of a pandemic. About Our Guest Anna Serio is a trusted lending expert and certified Commercial Loan Officer who's published more than 1,000 articles on Finder to help Americans strengthen their financial literacy. A former editor of a newspaper in Beirut, Anna writes about personal, student, business and car loans. Today, digital publications like Business Insider, CNBC and the Simple Dollar feature her professional commentary. Connect with Rebecca Email: [email protected] Twitter: https://twitter.com/finder Connect with Tiffany on Social Media Facebook: Money Talk With Tiff Twitter: @moneytalkwitht Instagram: @moneytalkwitht LinkedIn: Tiffany Grant YouTube: Money Talk With Tiff Channel Pinterest: Money Talk With Tiff This podcast uses the following third-party services for analysis: Podcorn - https://podcorn.com/privacy OP3 - https://op3.dev/privacy

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Key Takeaways

1
Small business lending shifted dramatically during COVID due to outdated bank technology and changing risk assessment
Banks partnered with fintech companies like Cabbage and OnDeck to process PPP applications faster using modern underwriting technology
Credit scores became less reliable as they lag 6 months behind actual financial situations
Lenders now focus more on cash flow analysis and connecting to accounting software rather than relying solely on credit scores
2
PPP loans have mixed effectiveness and require careful consideration of terms
82% of small businesses applied for PPP loans, but many were deterred by unclear forgiveness rules
The program was designed assuming the pandemic would last only months, not over a year
Changes were made to calculation methods (net vs gross revenue) to help sole proprietors qualify for more funding
3
SBA debt relief provides significant benefits for qualifying businesses
Businesses can receive 6-8 months of interest, principal, and fee coverage on SBA loans
Applies to 7(a) loans, 504 loans, and non-SBA microloans
No payments or guarantee fees required if approved during the relief period ending September 30th
4
Local and alternative funding sources may offer better options than federal programs
Shuttered Venue Operators Grant and Restaurant Revitalization Fund provide non-conflicting alternatives
Local programs sometimes offer more funding but may prohibit combining with PPP loans
SBA's lender matching service at sba.gov connects businesses with previously unknown lenders

Intro

Tiffany Grant discusses small business financing challenges during the pandemic with lending expert Anna Serio, exploring how COVID-19 transformed lending practices and what resources are available for struggling businesses.
Anna Serio is a trusted lending expert and certified Commercial Loan Officer who's published over 1,000 articles on Finder. A former newspaper editor in Beirut, she writes about personal, student, business, and car loans with commentary featured in Business Insider, CNBC, and The Simple Dollar.

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– Anna's Journey into Personal Finance

Anna shares how she fell into personal finance writing after moving to Beirut for graduate school in 2013. She worked at a struggling newspaper and learned budgeting while managing student loans without a local bank account.

The only thing I remember was my teacher went on this sort of rant about credit card debt... And she just like scared me so much about debt in general that I didn't understand until really until I started writing about loans and debt and personal finance, that it can be beneficial in some ways.
– Anna Serio

She notes the catch-22 of needing credit to build credit, and how Lebanon's banking system (including HSBC and Islamic banking) differed from American systems.

– How COVID Changed Small Business Lending

Anna explains that COVID caught lenders off-guard because their recession contingency plans were based on 2008's financial crisis, which had different dynamics.

Banks lacked technology to process PPP applications efficiently, leading partnerships with fintech lenders. Credit scores became unreliable as they lagged behind rapid financial changes, prompting lenders to focus on cash flow analysis instead.

Lenders are trying to meet that new kind of demand... Another thing that happened was that credit scores became a lot less reliable. It takes about six months for your credit score to update and reflect your financial situation.
– Anna Serio

– PPP Loans: Mixed Results and Ongoing Changes

Anna expresses mixed feelings about PPP loans, noting the program was designed assuming a short pandemic. Many businesses were confused by unclear forgiveness rules despite the 1% interest rate.

Recent changes improved access for sole proprietors by switching from net to gross revenue calculations. The program expires May 31st, with uncertainty about extensions.

Alternative grants like Shuttered Venue Operators Grant and Restaurant Revitalization Fund may offer better options and can sometimes be combined with PPP.

– SBA Debt Relief Program Details

The SBA debt relief program, extended through September 30th, covers 6-8 months of payments on qualifying SBA loans including 7(a) and 504 loans.

Tiffany recommends using sba.gov's lender matching service, which connects businesses with interested lenders via email after submitting business information.

If you can qualify for an SBA loan right now, you will not... It's not even that like you'll have payments deferred. Like you just will not make payments or pay the guarantee fee if you apply right now and get approved.
– Anna Serio

Resources

Findertool
SBA Lender Matching Servicetool
Small Business Development Centers (SBDCs)tool
Restaurant Revitalization Fundtool
Shuttered Venue Operators Granttool

Topics

Small Business FinancingPPP LoansSBA LoansCOVID-19 Economic ImpactBusiness LendingDebt Relief ProgramsFintech LendingCredit ScoresCash Flow AnalysisGovernment Grants