Photo | Courtesy of the U.S. Department of the Treasury
U.S. Treasury Secretary Steven Mnuchin
March 31, 2020
SBA to have $349B payroll stimulus program up and running by Friday
Photo | Grant Welker
Businesses along Worcester's Main Street have shuttered to in-store operations in response to coronavirus. The restaurant Armsby Abbey is offering outside pickup for customers.
The U.S. Small Business Administration announced Tuesday evening it has begun mobilization of banks and other lenders to distribute $349 billion to businesses with 500 or fewer employees, in a program largely designed to help them avoid layoffs and rehire staff amid the economic crisis caused by the efforts to limit the spread of the coronavirus.
U.S. Treasury Secretary Steven Mnuchin said he expects the SBA to have the program up and running by Friday, and businesses should be able to apply for a loan and be approved on the same day at any SBA 7(a) lender, bank or credit union.
The Paycheck Protection Program was part of the $2-trillion stimulus package passed by Congress and signed into law by President Donald Trump last week.
[Related: WBJ to host free webinar on $2T stimulus package]
Photo | Courtesy of the U.S. Small Business Administration
SBA Administrator Jovita Carranza
“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," said SBA Administrator Jovita Carranza in a press release. "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 main tenets of the program provide businesses with loans of up to $10 million to cover payroll costs, rent, utilities, and mortgage interest. Businesses may make the loans retroactive to Feb. 15 and can rehire their recently laid-off employees through June 30 to receive the money to cover the cost.
Businesses who receive loans can have a portion of their borrowing forgiven: the portion of operating expenses in the eight weeks following the date of loan origination. Because the SBA expects high demand for these loans, only 25% of the forgiven part of the loan will cover non-payroll costs.
All loans will have identical features: an interest rate of 0.5%, maturity of two years, first payment deferred for six months, 100% guarantee by SBA, no collateral, no personal guarantees, and no borrower or lender fees payable to SBA.
Those eligible to apply include for-profit businesses, nonprofits, veterans organizations, tribal concerns, sole proprietorships, self-employed individuals, and independent contractors.
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Anonymous
April 1, 2020
Is this payroll stimulus program for self-employed that have their own business and work alone, with no employees? And is only to apply for loans and not unemployment?
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