On March 27, Congress passed and President Donald Trump signed a $2.2 trillion stimulus package focused on helping the declining economy during the COVID-19 pandemic.
While it is best known for the $1,200 checks most Americans will receive, the stimulus package will also help small businesses by way of the Paycheck Protection Program (PPP). The PPP costs $349 billion and offers loan guarantees for small business, offered through the Small Business Administration (SBA).
Starting Friday, April 3, small businesses with less than 500 employees began to apply for the program which is set to cover eight weeks of payroll and other expenses. The loans are up to 75% forgivable as long as the money is spent on payroll, rent, mortgages and utilities. The interest on the loans is set at one percent and has a maturity of two years.
With only four days to prepare for the program, lenders were rushed for time and are still trying to work out the details on how to apply. On Friday morning, The President of the Bank of Atchison Jeff Caudle spoke on how he believed the process would work.
“We are participating in the program and are finalizing the process on how borrowers can apply,” Caudle said. “We envision businesses working with banks they already have relations with, though that is not required. The borrower will gather the required documents and the lenders will make sure they reach the SBA requirements, followed by an eight-week period where the funding is reviewed.”
In order to apply for the loan, some banks are sending out emails to potential applicants with applications attached. You can also find applications on the SBA website. Business owners will need to provide a W-3 proving their payroll and a valid driver license. They can apply for up to 250% of their W-3 payroll and any money used after the eight-week period will need to be paid back with one percent interest.
However, there is a concern that businesses will not receive their loan. The program is on a first come, first serve basis. If every small business applied, the $349 billion allotted for the PPP may not be enough and has some business owners nervous.
Jessica Norris-Henry, 50% owner of HC Style CO in Atchison, is worried what could happen to her business and other businesses in the area if their loans do not get approved. Like many stores, they have been forced to close their doors and been deemed unessential.
“We started online sales, Facebook sales to sustain or minimal bills. We just don’t know about our mortgage payments,” Norris-Henry said. “It could be devastating if those loans don’t come in. There are a lot of businesses like us in Atchison that would see a big drop and it could stunt growth in the community.”
Americans are applying, and doing it quickly. On Friday afternoon, Bank of America claimed to have over 60,000 applicants nationwide worth up to $6 billion.
Norris-Henry is staying positive, though.
“It would be very promising if the loans do work out,” Henry said. “It would be a huge sigh of relief to our economy during this time.”