Financial help available for small businesses
Help is on the way for small businesses and those who are self-employed, as well as for independent contractors who have been affected by the COVID-19 pandemic.
The Small Business Administration has implemented the Small Business Paycheck Protection Program with support from the U.S. Department of the Treasury. Small businesses can receive funds in the form of a loan to pay up to eight weeks of payroll costs for their employees, including benefits. The funds can also be used for paying interest on mortgages, rent and utilities.
According to a news release from the U.S. Department of The Treasury, loans will be fully forgiven if business owners use at least 75 percent of the money for payroll.
Jeff Jewell, executive director of the Danville-Boyle Chamber of Commerce, said the program is one of two options to help small businesses during the current crisis.
“One of the most important bits of advice I can give people is that there are two major economic relief programs out there — the PPP which we discussed — and also the SBA Economic Injury Disaster Loans. There are a lot of businesses that probably want to apply for both,” Jewell said. “There is new information that we can work those together, we just can’t use them for the same funds. The big difference is, the Payroll Protection Program is so that you can keep your staff on at current levels. It’s basically a payroll loan that is then forgiven. That is a God-send for people that want to keep their staff on. That is computed at 250 percent of your monthly payroll, and it does include things like rent and utilities. So it does include a lot of that overhead that I know is going to be a concern to people.”
Loan payments will be deferred for six months, and there will be no collateral or personal guarantees required. In addition, there will be no fees charged for the loans by the government or lenders.
Businesses with 500 or fewer employees will be eligible, and that includes nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors. Some businesses with more than 500 employees may also qualify, but that will be dependent upon their industry.
“The other thing that is very interesting in both of these programs is that our local banks will really be the people you’re working with. I’ve worked with SBA loans before in my career, and usually, you’re dealing a lot more with the SBA office. I think a real positive to the way they are trying to roll out this program is that almost all of your interactions, from the people that are helping with the loan to the people that are approving the loan, to the people that are helping you report out and seek forgiveness on the loan will all be your local community banker that you already have a relationship with. It makes it less intimidating, and you’re working with someone you’re already comfortable with. I think that’s a real positive of the program,” Jewell said.
Applications can be made through any existing SBA 7(a) lender, or through any federally insured depository institution, federally insured credit union and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. All qualified businesses and individuals are encouraged to apply quickly due to a cap on funds available through the program.
Jewell added that people should remember to be patient with their bankers throughout the process.
“The banks are literally, as we speak, receiving all of the detailed instructions and such that they need to administer these programs, so please be patient with your bankers. I know they are just building up call-back lists to get back to you with the best advice they can give you,” he said.
All loans will have the same terms regardless of the lending source or borrower. Small businesses and sole proprietorships can apply beginning Friday, April 3. Independent contractors and self-employed individuals can apply beginning Friday, April 10.
Check with your financial institution to determine if it is participating. A list of participating lenders and additional information can be found at www.sba.gov.
The Chamber of Commerce and its Economic Development Partnership partners have also put together a business relief COVID-19 resource page which is available through the website and Facebook page of the Chamber and all of its partners’ sites and pages.
“We are compiling all of the reliable, vetted information from the right sources, into one database you can access through any of our websites or Facebook page to keep people up to date,” Jewell said.
He added that anyone with a local business is welcome to contact him via email at email@example.com for assistance.
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