Caution on SBA guaranteed PPP loans.

Read, read and re-read the terms of your PPP loans that are being advertised as “SBA” loans.

They are first and foremost BANK loans. The SBA simply guarantees the loans to the BANKS, not to you.

Many years ago I assumed an “SBA” loan when buying an existing business.  I thought I read the terms carefully, BUT, well-hidden (Page 4 of a 5 page document) in the terms was this sentence: “Payments are due as of the date of possession.”

Now, the previous owners payment due date was the 15th of the month, and because it was an assumption I thought that was MY payment due date as well.

However, I took possession of the business on the 3rd of the month.

That meant my payment was also due on the 3rd, well before my accounts receivable began to come in. Believe me, I had to do some serious juggling to make that work.

Just a word to the wise.