Small businesses hurt financially by the coronavirus shutdown can find relief through a bill that President Trump signed into law on March 27.
Called the Coronavirus Aid, Relief and Economic Security (CARES) Act, the unprecedented $2.2 trillion stimulus package allocates $377 billion to support small businesses through forgivable grants and loans as well as through loan deferrals.
The bulk of funds for small businesses in the stimulus package, roughly $349 billion, is dedicated to the Paycheck Protection Program (PPP). The program aims to get cash to suffering owners quickly, and with less red tape than in the Small Business Administration’s existing loan programs.
Designed to help businesses with fewer than 500 employees cover eight weeks of payroll, along with some utility and rent costs, the program offers up to $10 million in loans that are 100 percent forgivable if the business keeps employees on the payroll or rehires laid-off staff by June 30.
The Paycheck Protection Program is “really more of a loan that converts to a grant,” Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce, told Inc. magazine.
About the Economic Injury Disaster Loan
Through a second option, the Economic Injury Disaster Loan (EIDL) program, businesses can apply for $10,000 grants that they do not need to pay back. Small businesses that have been financially burdened by the pandemic and lack other available credit are eligible for loans of up to $2 million.
Loan portions above the $10,000 grant are not forgivable but offer more flexibility in the types of expenses they cover. Under the EIDL program, owners can use grants and loans for a broader array of costs — including rent and mortgage payments, salaries, workers’ paid leave and the business’s operational needs.
Loan amounts that organizations can request through the EIDL program will be based on the level of economic injury they have suffered because of the coronavirus. Businesses needing a fast influx of cash can apply for a $10,000 emergency grant. Those who are approved will be able to receive the funds within three days, according to the Small Business Administration. Experts say businesses can apply for both the Paycheck Protection Program and the EIDL program, as long as the loans are not used for the same purposes.
“We encourage you to apply as quickly as you can because there is a funding cap,” a Treasury Department statement reads. (President Trump has reportedly pledged to ask Congress for more money for PPP loans if the allocated funds run out.)
Applications for the EIDL program are now open. Applications for PPP opened on April 3 for small businesses and nonprofits. Another PPP application, for independent contractors and self-employed individuals, is scheduled to become available on April 10.
Businesses can apply for Paycheck Protection Program loans by calling their banks and other lenders directly, or through the Small Business Administration website. Banks are just beginning to accept PPP loan applications so by contacting them now, businesses can get in the queue sooner. For more information, call the Small Business Administration’s 24/7 helpline at 1-800-659-2955.
Updated on April 24:
The government added another $310 billion to the Paycheck Protection Program. The loans will open again on April 27 at 10:30 a.m., according to Treasury Secretary Steven Mnuchin and published reports.
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