Major Delays in SBA-Backed Loans Are Slowing the Recovery

Major Delays in SBA-Backed Loans Are Slowing the Recovery

Major Delays in SBA-Backed Loans Are Slowing the Recovery

Businesses of all kinds are reporting a lag in approvals--and the consequences for the economy are dire.

By Diana Ransom @dianaransom

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The Coivd-19 pandemic hasn't been unkind to Stephen Schober's 35-year-old metal-supplies business. Several employees at Metal Supermarkets, which has 98 franchise locations in the United States, Canada, and the United Kingdom, did become ill but recovered; and the business itself was deemed essential, so it never had to close its doors.

"We're expanding," says Schober, whose Mississauga, Ontario-based company has more than 500 employees across the system, which booked $117 million in global 2020 revenue, up from $110 million in 2019. "We're quite attractive now as a franchise opportunity because we are an essential business that's been growing sales, and we're profitable."

But Schober has a problem: Six of his newest American franchisees are having difficulty getting financing. Lenders, he says, are now requiring more rigorous due diligence for loans backed by the U.S. Small Business Administration --even though Metal Supermarkets' business model has been deemed eligible under the SBA affliate rules and is listed on the agency's Franchise Directory.

Among other things, he says, lenders are now asking more questions, and some want higher down payments, more liquidity, and more outside income. They also require