BrightBridge Capital is a nonprofit lender with a focus on making startup and small business loans that many banks won't consider. The organization isn't a lender for the Coronavirus Aid, Relief, and Economic Security (CARES) Act, but it is in a strong position to help others find a path to those resources, and to help commercial lenders understand some of the nuances of dealing with nonprofit and other unconventional loan-seekers, says President and CEO Mike Ohlman.
Q: Before the world was upended, what was your primary focus?
A: BrightBridge is a nonbank lender. We partner with commercial lenders throughout Tennessee, North Alabama and Georgia to help them make loans to businesses that are credit-worthy but do not qualify under conventional underwriting.
We provide loans through the Small Business Administration and our own Small Business Loan Program. As a nonbank lender, we do not offer the same loans that banks can provide. Instead, we make credit-worthy loans that banks do not make, primarily because of policy screen-outs, such as startups, lack of adequate collateral, etc.
Prior to COVID-19 interrupting the economy, we were visiting with commercial lenders and planning multiple training events throughout the state, beginning with a March kickoff. All of those are now on hold.
Q: How are you spending most of your time these days?
A: As the economy began to shut down, we began receiving calls from our borrowers requesting loan deferrals. Working with the Small Business Administration and our bank partners, we have been able to honor all reasonable requests.
When the media exploded with news that there would be Small Business Administration-supported assistance for businesses, we received many requests about those programs. We've directed these inquiries to the Small Business Administration for programs they will handle directly, and to commercial lenders for the program known as the Paycheck Protection Program, which is being handled through those banks.
In addition, we have been approached by many commercial lenders with little or no Small Business Administration experience. We have helped those institutions in setting up their own internal processes to work with the Small Business Administration so they will be able to offer this important program to their business customers.
Q: What are the challenges to understanding all the options out there for weathering this crisis?
A: The federal government needed to respond quickly to the economic fallout of the COVID-19 crisis and, comparatively, it did. Up until passage of the CARES Act, both loan providers and borrowers had to sort through daily reams of on-the-fly, often changing information.
From conversations with our lending partners, we know that determining how best to help their business customers has been a prime consideration, while businesses are asking us which program is most beneficial for them. Now that program guidance and specifics have been issued, participants on both sides of the CARES Act can better determine how to proceed.
For lenders who have been offering Small Business Administration loans, one of the biggest changes they have to adapt to is that nonprofits can apply for loan assistance. Prior to the CARES Act, the first requirement for Small Business Administration loan recipients was that they must be a for-profit business. Now nonprofits, including churches, can apply.
Q: What guidance are you offering clients to help them navigate these challenges?
A: Since this is a first-in-a-lifetime event for all of us, we are encouraging everyone to practice patience. Federal, state and local governments and agencies are adapting their existing economic assistance programs and, in many cases, creating new ones in response to the COVID-19 crisis. For short-term needs, call your existing bank. For needs you anticipate in the future, go to the Small Business Administration website at sba.gov and apply for disaster assistance. Do it soon.
Q: Any other topics you'd like to touch on?
A: Obviously, most of the calls and emails coming-in to us now are about the CARES Act. Business owners, especially those who have had to close, are understandably concerned about how all of this will play out. All of these businesses are determined to manage their way through this — they are not telling us they are quitting.
This same perseverance we've seen in the businesses that submitted loan applications to us prior to the economy shutting down; they are still moving forward.