Coronavirus Relief For Small Businesses Increases With High Demand
As nonessential businesses keep their doors closed around the country, small business owners are losing capital needed to make payroll, pay bills, and try to reopen when it’s allowed.
To help small businesses forced to shut down during the coronavirus pandemic, the Coronavirus Preparedness and Response Supplemental Appropriations Act was signed into law on March 27. It contained $376 billion in relief and is implemented by the Small Business Administration. The Paycheck Protection Program was a part of the act in addition to the existing SBA Economic Injury Disaster Loan Program.
With such high demand for assistance, both programs were flooded with applications and ran out of funds within two weeks from its initial allocation. As of Friday, the Trump administration signed another coronavirus economic relief package that included an additional $321 billion for the newly created Paycheck Protection Program.
The Paycheck Protection Program (PPP) is administered through local lenders like a bank, credit union, or community bank. Businesses of less than 500 employees can request up to $10 million with a 1% interest rate.
“The goal of the [Paycheck Protection Program] is if 75% or above is used for payroll, and payroll is a very broad term — that would include health benefits, retirement taxes, anything associated with employees and paying employees, it is forgivable. Literally, totally stricken off. The lender gets paid back by the federal government,” says Robert Scott, regional administrator for the SBA’s Great Lakes Region.
The hope is that this would allow businesses to keep their employees and would allow businesses to reopen without having to train new hires.
“In Wisconsin alone, there were 43,395 [Paycheck Protection Program] applications approved for a grand total of $8,317,705,842 for the state of Wisconsin,” cites Scott.
The Great Lakes region, which includes Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin, was “number one in the applications approved for the PPP and number two in overall dollars,” he adds.
Critics of the Paycheck Protection Program have pointed out that some seemingly larger businesses and publicly traded companies have qualified for and received this money. The largest among those include chain sandwich shop Potbelly and video storage provider Quantum.
A company like Potbelly received so much money because franchises with under 500 employees qualify as a small business, Scott explains. He says the program isn't perfect and produces some outliers. Be he defends it: “The vast majority of funds that are getting out there are truly helping what it was intended to help, which was small business and nonprofits.”
The SBA is still also helping small businesses through traditional lending programs such as microloans. You can check its website for updated information.
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