Small business loans now available
Last Friday, a $350 billion economic aid program for small businesses opened as part of the economic recovery Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Paycheck Protection Program, offered primarily through the Small Business Administration, is designed to “provide a direct incentive for small businesses to keep their workers on the payroll.”
Robert Nelson, the district director of SBA’s Massachusetts office, told the Banner that the SBA started accepting applications on Friday, April 3.
“These are intended to be lifelines to help small businesses survive what we’re currently going through, and to recover,” he said.
The SBA will forgive paycheck protection loans if employees are kept on the payroll for eight weeks, and if the funds are used for payroll, rent, mortgage and utilities. The loans are available through June 30. Nelson noted that if employees are brought back onto payroll by that date, the loan may also be forgiven.
In acknowledgement of the ongoing crisis, the SBA has deferred loan payments for six months. Loans are up to $10 million, with an interest rate of 1% and a maturity of two years.
Nelson urged small businesses and private nonprofits to talk to their existing bankers.
“What the bank is going to be looking for is documentation from the small businesses as far as what their payroll is and what their employee levels are,” he said. “It really is a pretty simple program. The application is pretty simple.”
The SBA has already been processing high numbers of applications since Friday, although news media have reported that some banks have been slow to process the loans.
“Many lenders worked overnight and through the weekend in order to be able to submit a whole slew of applications to the SBA,” Nelson said.
Small business owners can apply through the SBA or their participating lenders. Small business owners can also use the funds to rehire recently-laid off employees, as the program will be retroactive from Feb. 15.
“What we’re doing is we’re providing a 100% guarantee to the bank, to give them the incentive to help us to make these loans,” Nelson added. “There’s no collateral required on the loans, there’s no personal guarantee.”
Other emergency funds are available through the SBA’s Economic Injury Disaster Loan Program, or EIDL, which offers low-interest loans up to $2 million. The first payment is deferred for a year, and Nelson said that the payments are “intended to be really affordable.”
The EIDL Emergency Advance program further provides immediate relief to struggling businesses. Small business owners can receive advances up to $10,000 after they apply for the EIDL. These advances do not have to be repaid.
“We’re told that even applications that are denied or declined would be eligible for the economic injury loan advance,” said Nelson.
Nelson said that the SBA streamlined the process through their website, and the application is fairly easy to complete. “It will probably take them a matter of minutes to get through that initial application and to request the advance,” he said.
Markey talks business
U.S. Sen. Ed Markey and state Rep. Liz Miranda also addressed protective measures during an online conference on Thursday. Markey acknowledged the $1,200 payments that will go to eligible U.S. taxpayers as part of the $2.2 trillion relief package that passed last week. He noted that this check may come on top of unemployment benefits for certain families.
Markey also acknowledged the Payroll Protection Program. According to the Tax Foundation, the Small Business Administration is providing “100% federally-backed loans for certain payroll expenses through June 30, with up to eight weeks of forgiveness for small businesses, certain nonprofits and self-employed individuals. The loans are forgivable if employers retain employees at comparable salary levels prior to the crisis.”
The program is meant to protect the payroll of small businesses, said Markey, “so that when we come out of the crisis people can jump off that life raft and go right back to work.”
COVID-19 has severely impacted the economy, especially in places that were struggling prior to the virus. Miranda said that her district, the 5th Suffolk, which includes parts of Dorchester and Roxbury, is already one of the poorest districts in the commonwealth.
“For communities of color, low-income communities, folks are really worried that we aren’t getting our fair share quick enough,” she said, advocating for an equitable distribution of resources.
Markey noted the difficulties of dealing with the federal government. He said that he reached out to Vice President Mike Pence weeks ago regarding the PPE shortage. He then called on the president to use the Defense Production Act, he said, which gives the government more control over industrial production. The president only invoked the act on Thursday.
“We have a president who is incompletely incompetent,” said Markey, adding, “He just has ignored the reality of what we need.”
Miranda agreed. “Incompetence is costing lives,” she said. She’ll continue pushing through to the federal level to demand more resources, she added.
For all residents, Markey emphasized the importance of staying inside, a proven way of slowing the virus.
“I hope you’re abiding by all the advice we’re getting from medical experts,” he said. “We have the best in the world, right in Boston, and if we listen to them, we’ll make it through and minimize the impact this incredible challenge is going to present to us, the whole rest of this country and the world.”