Small Business, Big Mission: As banks were overwhelmed with PPP requests, TMC Financing scrambled to help

Barbara Morrison will always remember St. Patrick’s Day 2020 as the day the world changed, and her world along with it.

The Bay Area shelter-in-place orders that came into effect March 17 in a moment upended Morrison and her company, TMC Financing, a nonprofit that helps small businesses get SBA loans to buy their premises. Her borrowers were on the phone all day, most of them calling a halt to lending plans that had been in the works for months.

“The suddenness of this downturn is what’s so shocking to me,” Morrison said. “One minute our clients were fine, and then the next minute they were closed, completely shuttered, no revenue coming in.”

But it quickly became apparent to Morrison that the SBA was struggling to understand the scale of help that her clients and thousands if not millions of businesses across the country needed. The agency’s first reaction to the shutdown was to allow TMC and other SBA lenders to authorize loan deferments.

“We created a deferment team, and let all of our clients know that we’d process deferments for them. We started down that path,” Morrison said, even as she worried that deferring payments now meant her clients would be paying more later.

“The SBA and Treasury quickly realized that this was more serious than just a deferment. That’s when they came up with debt forgiveness, which was truly a godsend,” Morrison said of the SBA’s decision under the CARES Act to pay borrowers’ principal and interest payments for six months. “That was such a relief to our portfolio clients. It really gave them hope that they wouldn’t have to close their doors permanently.”

Then the SBA and Treasury shifted into overdrive, with the CARES Act’s creation of the Paycheck Protection Program that provided loans that become grants when most of the money is used to pay employees.

Morrison decided to offer its existing clients PPP loans, getting a $20 million line of credit to be able to fund loans for up to $250,000. The SBA is paying lenders a 5% processing fee for PPP loans up to $350,000, with the fee falling for larger loans.

TMC even partnered with a Bay Area financial institution to handle the bank’s demand for PPP loans, leveraging TMC’s familiarity with the SBA’s electronic system. “We had six people on that project, then added another six, and then four more,” Morrison recalled, declining to name the bank. There was a rush to get SBA loan approval before the $350 billion allocation for the PPP funding was exhausted, which happened April 16.

All together, TMC funded 570 PPP loans. And Morrison said her organization will be ready to serve clients when the second round of PPP funding, an estimated pool of $310 billion, becomes available.