Seven of Northcreek’s 37 companies had already received SBA approval for their PPP applications as of late last week, Peterson, a Northcreek managing director, told me.

“We’ve had the benefit of following the legislation and even helping to shape it through our industry association,” Peterson said.

Northcreek invests debt and equity to provide capital that banks typically don’t want to provide, often alongside private equity firms. Its investments focus on companies with established revenues and profits.

Most are small to midsize companies, and all are well under the 500-employee maximum to qualify for PPP funding, Peterson said.

The program enables small businesses of 500 employees or less to borrow up to 2 1/2 times their average monthly payroll. They can apply 25% of that to other costs such as mortgage, rent and utility bills to keep the business open. Loans of up to $10 million are available. The key for many companies: the loans are forgivable for the amount used for payroll, rent or mortgage, utilities and other qualifying expenses over the eight weeks after they receive the money. They have to keep all their employees on staff to get the loan forgiven. Otherwise, the loans charge a low 1% interest rate.

As of 3:00 p.m. Sunday, banks had processed $205 billion worth of PPP loan applications, according to the American Bankers Association. That’s 58% of the program’s $350 billion limit, although that amount is expected to expand.

Here are some tips he picked up while shepherding more than three dozen companies through the PPP process:

• Get started now if you haven’t already. “We’ve been advocating to everybody there’s a first-mover advantage,” Peterson said.
  
  
• Choose your bank wisely. Loan applications have to go through a bank. It’s key to identify which bank is most likely to process your loan. That’s usually the bank where you already have a lending or depositor relationship. “Your path will be quicker when you go where your banker knows you,” Peterson said.
  
  
• Open up communication lines. Along the lines of knowing your banker, talk to that person, too, to make sure you understand the bank’s particular requirements, Peterson said.
  
  
• Do what you’re told. “Follow the banker’s directions to the letter,” Peterson said. “If there’s any variation, the application is going to be set aside to be dealt with later. That’s not where you want to be. Make it easy for the banker.” Peterson said the “worst thing” that can happen is to have your application put into the set-aside pile.
  
  
• Get your financial documents together. The loan application process isn’t overly lengthy, but you’ll need some financial data, particularly monthly payroll figures for either the past 12 months or for 2019. There’s some discrepancy there. The Treasury documents tell applicants to use payroll data for the last 12 months. But other information has said most companies will use 2019 data. Ask your banker which they prefer. Make sure you have that information together. The loan amount is based on those figures.
  
  
• Be patient. Hundreds of thousands of small businesses are applying, many all at the same time. “Banks have been asked to move at light speed,” Peterson said. “It’s a massive effort.”

“I think this is going to end up making the difference in how quickly we recover,” he said. “This lifeline is going to carry us to the other side. Otherwise, we’d be in a tailspin for a long time.”

Smaller banks are getting overrun, too. LCNB National Bank had to temporarily suspend taking new applications early this week, CEO Eric Meilstrup told me. The $1.6 billion lender had received more than 500 applications.

“We would have had many more, and we didn’t want customers to be part of the backlog if they had another option,” Meilstrup said. “We have a huge desire to reopen that, and we’ll look at it early next week. We obviously don’t want to not take care of somebody. But we’re focusing right now on taking care of the customers who have applied.”

Milford-based CenterBank, a big SBA lender that has just $250 million in assets and three offices, has processed 150 PPP applications totaling $30 million, president Stewart Greenlee told me. That’s small compared with the big banks, but it’s still rising and nearing 15% of the bank’s total assets.

“We studied this ahead of time and had a dedicated group that worked over the weekend to handle this,” Greenlee said. “We wanted to make sure we could relieve anxiety for our customers as fast as we could.”

The program enables small businesses of 500 employees or less to borrow up to 2 1/2 times their average monthly payroll. They can apply 25% of that to other costs such as mortgage, rent and utility bills to keep the business open. Loans of up to $10 million are available. The key for many companies: the loans are forgivable for the amount used for payroll, rent or mortgage, utilities and other qualifying expenses over the eight weeks after they receive the money. They have to keep all their employees on staff to get the loan forgiven. Otherwise, the loans charge a low 1% interest rate.

“It’s a Herculean task,” First Financial Bank CEO Archie Brown told me. “The Treasury Department and the SBA created legislation and rules and rolled it out to banks all in the last week.”

Business owners can take steps to smooth the process that’s encountering logjams at the SBA even when things are done right. Make a mistake and your application can get slowed even more.

Tips include:

• Do not apply at several banks: One borrower can only apply with one lender. “If someone came to us and said they already applied at another bank, we just ask them to be patient with that bank,” Greenlee said.
  
  
• Don’t turn in incomplete submissions: They will delay processing your loan. While lenders are going in with customized processes, several banks have already set up a system that kicks back the application to a banker when the form is incomplete. KeyBank has developed a list of documents and information small-business owners need when applying. You can learn more here.
  
  
• Do get updates. Visit the U.S. Treasury website, linked here, and SBA’s web pages often for updates. Greenlee says that will give business owners the most current information on any changes in the program.
  
  
• Do be patient: “I understand if I’m a customer I just want a response,” Meilstrup said. “We’re working on that piece of it. I totally understand it’s hard to be patient when they’re worried. We’re telling our customers we’re working extremely hard to take care of you. Don’t take the absence of a response as meaning we’re ignoring you.”
  
  
• You cannot use IRS 1099 workers as your employees: While this may not be an issue in the front-end when applying for the loan and calculating the relief amount, it may become an issue when small businesses are asking for the loan forgiveness down the road. Double-check your payroll calculation and total number of employees. On April 10, the SBA will allow independent contractors and self-employed individuals to apply for the loan relief program. Typically, those entities file their taxes using 1099 forms.
  
  
• Do not start new entities and apply for loan: The PPP program allows businesses to separately apply for a loan for every business where a person/persons may have a beneficial ownership. But all entities under one beneficial ownership must have been an active business by Feb. 15.
  
  
• Sum of your holdings cannot go past 500 employees: This provision is complicated. Hotels and restaurant chains are exempt from this rule, and late last week the SBA added franchise owners who employ more than 500 people to that exemption list as well. The only caveat: No single outlet could employ more than 500 people. For every other business, the 500-worker maximum number is in play.
  
  
• Don’t miscalculate: Complete your own calculation ahead of time to make sure you borrow as much as you qualify for the PPP relief. Remember that in the event some of your loan is not forgiven in the final calculation, it will end up being a 1 percent loan for a few years — still not a bad deal.