Time is running out for those looking to take advantage of the Paycheck Protection Program (PPP) for small businesses.
Small businesses have until Tuesday, June 30 to apply for the PPP loans.
Earlier in the year, the Small Business Administration has made $349 billion available in loans for millions of small businesses across the nation. It’s an unprecedented public-private move due to the pandemic pitfall.
The CARES Act (Coronavirus Aid, Relief and Economic Security) announced earlier in the year that PPP will provide relief to businesses so they can sustain their businesses and keep workers employed.
This unprecedented public-private partnership is going to assist small businesses with accessing capital quickly. Our goal is to position lenders as the single point-of-contact for small businesses – the application, loan processing, and disbursement of funds will all be administered at the community level. Speed is the operative word; applications for the emergency capital can begin as early as this week, with lenders using their own systems and processes to make these loans. We remain committed to supporting our nation’s more than 30 million small businesses and their employees, so that they can continue to be the fuel for our nation’s economic engine.
The new program will help small businesses pay their employees plus other monthly expenses, as well. The loan program will save business owner’s sanity during the coronavirus outbreak.
This legislation provides small business job retention loans to provide eight weeks of payroll and certain overhead to keep workers employed. Treasury and the Small Business Administration expect to have this program up and running by April 3 so that businesses can go to a participating SBA 7(a) lender, bank, or credit union, apply for a loan, and be approved on the same day. The loans will be forgiven as long as the funds are used to keep employees on the payroll and for certain other expenses.
Like business owner Brandee Gaar, she says her employees are like family.
“We still need them to all work and we want them to have a job, they are like family to us” Gaar said.
The PPP is available to small businesses including nonprofits, veterans organizations, tribal concerns, sole proprietorships, self-employed individuals and independent contractors - with 500 or fewer employees or no greater than the number of employees set by the SBA as the size standard for certain industries
The loan program offers up to $10 million and can be forgiven if the money is used for payroll costs and other business operating expenses in the eight weeks following the date of the loan origination.
ABC Action News spoke with Adam Whelchel with Spark Bookkeeping who highly recommends businesses to hire some sort of an accountant or bookkeeper to help easily apply for the loan, plus carefully track how it is spent.
“Make sure you just track everything you get especially on the PPP and make sure you don’t have to pay it back because you misused it or didn’t document well how you used it,” Whelchel said.
All loans under this program will have the following identical features:
- Interest rate of 0.5%
- Maturity of 2 years
- First payment deferred for six months
- 100% guarantee by SBA
- No collateral
- No personal guarantees
- No borrower or lender fees payable to SBA
SBA’s announcement comes on the heels of a series of steps taken by the agency since the President’s Emergency Declaration to expeditiously provide capital to financially distressed businesses affected by the coronavirus (COVID-19) pandemic.
Since March 17, SBA has taken the following steps:
- Declared all states and territories eligible for Economic Injury Disaster Loan assistance
- 1-year deferment on Economic Injury Disaster Loans provided due to COVID-19
- Automatic deferment of previous disaster loans for homeowners and businesses through 2020
- Waiver of garnishments through 2020
Click here for more information on SBA’s assistance to small businesses.
Applications are estimated to be available on April 3, 2020. Businesses will need their EIN number plus the average of their 12 month payroll.
Local banks will be responsible for allocating the funds.