Hartford Business Journal

24 Hartford Business Journal | March 8, 2021 | HartfordBusiness.com ON THE RECORD: Q&A T he U.S. Small Business Administration has always played an important role helping employers in Connecticut access capital. But the federal agency arguably had its most significant impact over the last year, unveiling several new or expanded programs that provided financial lifelines for companies hit hard by the pandemic. In Connecticut alone, for example, more than 64,000 businesses last year received $6.7 billion in potentially forgivable loans from the Paycheck Protection Program. That number only continues to rise in 2021 as the program enters its last month in operation. Amid all that flurry of activity, the SBA's Connecticut District Office quietly got a new leader. In October, Catherine Marx was named the state's new district director. Marx came to the SBA from the U.S. Census Bureau, where she recently served Connecticut as a partnership specialist, working with business associations, community organizations and state/local governments to develop and implement strategies to encourage participation in the 2020 Census. Prior to that she served in various public positions, including district director in Gov. M. Jodi Rell's administration. She has also owned her own small business and worked in corporate finance. Marx recently participated in a Q&A with the Hartford Business Journal to discuss the PPP and other SBA programs that have provided capital to small businesses during the pandemic. Here's what she had to say: Q: The latest round of the Paycheck Protection Program expires at the end of this month. What can you tell us about demand for PPP loans from Connecticut companies during this latest round of funding? The number of PPP loan recipients in Connecticut continues to rise. Since the re-launch on Jan. 11, over 22,600 businesses and entities received approvals totaling $1.9 billion. These federal funds are available to those who didn't receive PPP forgivable loans in 2020 and those that are still in need. The eligibility requirements have been expanded, there are set asides for the smallest businesses located in distressed areas, the forgiveness process has been simplified, and overall, the process continues to improve. One of the most recent changes to the PPP is that the SBA decided for a two-week period starting Feb. 24, to only accept applications from companies with fewer than 20 employees, to ensure the smallest of businesses get access to credit. The deadline to apply for a PPP loan is March 31, or sooner if Congressional appropriations are exhausted. As of late February, 49.4% of the $284 billion in PPP funding had been committed. Q: The $900 billion federal stimulus bill passed in December included other efforts to stimulate small business lending and made positive changes to other SBA loan programs, including the 7(a) loan program. Can you discuss those changes and how they benefit potential SBA borrowers and lenders? COVID-19 has created a need for small business support not seen since the Great Recession of 2007- 09. As such, the Economic Aid Act provides better access to capital by providing higher loan guaranties, fee waivers and payment relief. Loan provision enhancements in effect through September include: • SBA 7(a) guaranty increased to 90% (max $3.75 million); • Elimination of the SBA guaranty fee and annual guaranty fee; • Increase SBA Express Loan maximum from $350,000 to $1 million (permanent increase of $500,000 after September); • SBA Express Loans of $350,000 or less will have an increased guaranty from 50% to 75%; • SBA 504 third-party lender fee will be waived to the senior lender; • SBA 504 Certified Development Company (CDC) processing fee will be waived to the borrower and the SBA will reimburse the CDC up to 1.5%. Q: Are there any other changes from December's stimulus package that small businesses should know about and potentially take advantage of ? The SBA continues to play an unprecedented role in the federal resources available to recover from the economic effects of the COVID-19 pandemic. The Economic Aid bill includes the extension of the Economic Injury Disaster Loan (EIDL) Program, funding of the Targeted EIDL Advance, and a grant program for shuttered performance- venue operators. Small businesses can get the most up-to-date information on these programs, including PPP loan forgiveness, at www.sba.gov/ coronavirusrelief. Additionally, I encourage all small businesses and entities to understand or consult with their tax advisor on the IRS ruling regarding expenses paid with forgivable PPP loans that are now tax deductible. Q: Much of the attention over the last year has been focused on the PPP program. What's happened to traditional SBA loan programs? What do you think demand for regular SBA loans will look like in the year ahead? Nationally for fiscal year 2020, SBA's flagship 7(a) loan program provided historic levels of capital to small businesses totaling more than $22.5 billion. Also, the 504 loan program funded $5.8 billion and the micro loan program provided $85 million. These results represented another year of increased performance helping businesses in underserved communities. The Economic Aid Act has made SBA loans much more attractive (increased guarantee to 90%, fees waived, etc.), therefore, with an improved economy, demand should increase. Indeed, Connecticut's traditional SBA lending through January is on pace to exceed fiscal year 2020 results. Q: What are your goals and priorities in 2021? In my opinion, the SBA was the 'best-kept secret' in Connecticut. That changed in 2020, with over 64,000 Connecticut businesses receiving $6.7 billion in PPP loans. Now, the District Office — made up of a team of economic development, marketing and lending professionals — has a larger stage to amplify the resources of numerous SBA federally-funded partners such as Connecticut's Small Business Development Center, Women's Business Development Council, University of Hartford Entrepreneurial Center, Veterans Business Outreach Centers and SCORE. In the year ahead, we will continue to prioritize disaster relief, expand capital access to entrepreneurs in disadvantaged communities, and focus on helping entrepreneurs start, grow and expand their businesses. Q: Do you have a sense of any major changes that might be coming to the SBA under a Biden administration? The Biden-Harris administration has nominated Isabel Guzman — director of California's Office of the Small Business Advocate and previously a deputy chief of staff at the SBA during the Obama administration — to lead SBA and is focused on ensuring that small businesses receive the support they need to keep their doors open and continue to employ millions of Americans across the country. The administration is working with the SBA to identify immediate solutions to address eligibility, compliance, integrity and promote transparency. As PPP deadline nears, SBA's other loan programs made more attractive by federal stimulus law By Greg Bordonaro gbordonaro@hartfordbusiness.com PHOTO | CONTRIBUTED Catherine Marx was named the SBA's Connecticut district office director in October.

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