Federal program offers financial relief for small businesses impacted by COVID-19

  • Federal program offers financial relief for small businesses impacted by COVID-19

Federal program offers financial relief for small businesses impacted by COVID-19

One program, dubbed the Paycheck Protection Program (PPP), begins this Friday.

The SBA approved the first loans on Friday.

"There are some imperfections and questions but we expect billions in loans to be approved today". By comparison, the most money the SBA has loaned in a single year was $30 billion.

"That's a huge concern", she said.

Numerous hardest-hit businesses have been restaurants, retailers, gyms and hair and nail salons forced to shut down to try to stop the spread of the virus.

Like any new program wrinkles appeared and the SBA is working on ironing out those issues. Many lenders didn't receive the final rules and regulations to the program until 7:30 p.m. Thursday night. Many lenders are new to the SBA or haven't worked with them in a long time so they are still getting accustomed to the programing.

How does the Paycheck Protection Program (PPP) work? A sample application form is available here.

The number of Americans filing for unemployment benefits last week shot up to more than 6 million, a record high, Labor Department data on Thursday showed. Many small businesses in MA have been closed since Gov. Charlie Baker issued a stay-at-home order on March 23. Earlier this week, he extended that to continue through May 4.

What was meant to be a lifeline to small businesses to help keep them afloat during the coronavirus health emergency by providing the with some working capital at low interest rates has now been cut off.

That could make it hard for banks to meet the demand of PPP loans. On Tuesday, the U.S. Treasury said it plans to be able to fund the loans by today, but lenders are anxious they won't have enough capital to fund the demand and are asking how they'll be able to replenish capital - and how quickly. Forgiveness is also based on the employer maintaining or quickly rehiring employees and maintaining salary levels, the SBA said.

Loans offered through the Paycheck Protection Program are available for up to two months of a small business's average monthly payroll costs from the previous year, plus an additional 25 percent up to a maximum of $10 million, Roberts explains.

"We need this release valve in place where lenders of all types can sell the paper off to recycle the funds".

Thursday afternoon, Treasury Secretary Steven Mnuchin said during a news conference with President Trump that he will to raise the interest rate on the new small business loans from.5 percent to 1 percent to help make the loans economical for banks.

The programs are open to companies with fewer than 500 employees.

Information for businesses and the application for aid can be found on the treasury website. Independent contractors and self-employed individuals can apply next Friday (April 10).

How much can a business request?


The economic injury loans provide $10,000 and will not have to be repaid.

It's one thing for those firms to take out the loan and then business picks up after two months, according to Wade. Small businesses can apply for 250% of their total monthly payroll.

In addition to drawing consternation from lenders and small business owners, the rollout is coming under fire from Republican Senators Josh Hawley of Missouri and Ted Cruz of Texas for what they said were restrictions on churches and religious non-profits. Loans can also be obtained through any participating federally insured depository institution, federally insured credit union, or Farm Credit System institution.

Larger banks like JPMorgan Chase had warned that they were not prepared to take applications as early as the White House had hoped. The loans, which are guaranteed by federal government and don't require collateral, will be forgiven if funds are used for payroll costs, mortgage interest, rent and utility payments for two months and if businesses retain and rehire employees. In the past weeks, so many people tried to access an existing Economic Injury Disaster Loan program that SBA's website failed repeatedly, Bill Koontz, an SBA spokesman in California, said late last week.