Millions of small business owners will be turning to the government, seeking help for an individual and nationwide cataclysm, the economic devastation caused by the coronavirus outbreak.
This story by Joyce Rosenberg originally appeared on NBC 9 News.
The government says it will begin disbursing loan money to company owners and freelancers Friday under the Paycheck Protection Program, part of the $2 trillion relief package signed into law last week. For many companies, it may be the quickest way to rebuild the lifeblood of any business: the cash flow that enables a company to pay its bills.
The program could be vital to the economy’s recovery: Small businesses employ about half the workers in the private sector. By some estimates, as many as 20 million people will have lost their jobs by the end of April.
Those interested can learn more about the loans here.
The government said this will be a fast, streamlined process – some companies could get money the same day, not like the weeks it takes when applying for a traditional SBA loan. People can apply through any federally insured bank, credit union or farm credit system institution, not just a traditional SBA lender. Most businesses are expected to apply online, through a financial institution’s website.
The government will calculate how much of a loan will be forgiven after June 30. The program covers the period from Feb. 15 through June 30 and owners will need to document how many workers they employed during that time and how much they were paid.
The SBA is giving out what are called economic injury disaster loans. These are intended to help companies whose revenue losses have left them without working capital, making it difficult or impossible to pay their operating expenses including payroll, fixed debt payments and accounts payable bills. But a company that gets a disaster loan cannot use the money for payroll purposes if it’s also getting a paycheck protection loan.
The disaster loans give owners up to $2 million at an annual rate of 3.75 percent. The loans can be taken out for as many as 30 years, but the terms of each loan will be determined on a case-by-case basis and will depend on each company’s financial situation.