As of the March 27 passing of the CARES Act — a record $2.2 trillion stimulus package aimed at boosting the economy in the midst of the COVID-19 crisis — small businesses were assured that they would have more guidance regarding applications to the Paycheck Protection Program (PPP) within the week.
“More details to come” has been a common refrain concerning the stimulus package and its multiple programs, which includes the $350 billion lending program — the PPP — that is meant to incentivize businesses to keep employees on payroll.
Yet as of today, April 3, the day that small businesses and sole proprietorships can begin applying for loans on a first-come, first-served basis, details on the process still are up in the air.
“Many of SBA-approved lending institutions have just received the full details for administering the PPP loans,” said Sean Moore, program manager at the Washington Center for Women in Business in Lacey, an arm of Thurston EDC’s Center for Business & Innovation that supports businesses in all stages of development across Washington state. “Although small businesses including LLCs, S corps, and C corps can apply for the loan starting April 3, many of these lenders may not be able to process applications as quickly as you may think. They are already overwhelmed with inquiries and will be dealing with issues of employee capacity.”
Individual banks are the parties responsible for working with the SBA to administer the loans and will each have their own application processes.
Banks of all sizes say that they still are waiting on additional information. Some of the largest banks, including Bank of America and JPMorgan Chase, have managed to open their online application portals, but only to those businesses that had an account with the bank prior to Feb. 15.
Portals through some smaller regional banks do not appear to be active as of yet. New guidance from the SBA was released in the form of a 31-page document late Thursday night — giving banks little time to meet today’s rollout date. Certain regulations and guidelines also remain unclear.
Details about the program itself, however, have been relatively straightforward, save some shifts in interest rates, which were originally set at 4 percent in the CARES Act, changed on Tuesday by the Trump administration to 0.5 percent, then were shown at 1 percent in the guidelines issued last night.
“You can apply for loan forgiveness for these loans if you can prove the money was used for payroll or other qualifying expenses like rent and utilities in the eight-week period after it was received,” explained Moore of the Washington Center for Women in Business. “It is the business owners’ responsibility to apply for this loan forgiveness through their lender. The lender approves the loan forgiveness, not the SBA.”
Businesses can apply for both the SBA Disaster Loan and the Paycheck Protection Program as long as the funds received are used to cover different expenses at different times, Moore added.
The Paycheck Protection Program is available through June 30 for any small business with fewer than 500 employees — including sole proprietorships, independent contractors, people who are self-employed, nonprofits, and veteran organizations that have been affected by COVID-19.
Loan payments will be deferred for six months, small businesses will not be charged any fees, and no collateral or personal guarantees are required. All SBA 7(a)-approved lenders should be participating.
While uncertainties pertaining to individual lenders and the timeline on which they will roll out the program remain, banks urge businesses to be patient and remain as calm as possible. Resources to quell anxiety and provide guidance, like the COVID-19 Business Hotline, also are available.
“We are receiving calls all day and our team is here to get resources out into our community,” said Robin Houde, administrative specialist at the Washington Center for Women in Business and one of the people running the COVID-19 Business Hotline. “If we don’t have an answer on hand, we are reaching out to team members and doing necessary research to get back to them within 24 to 48 hours. However, our team has been putting a lot of effort into getting back to the within the same day, as we feel the immediacy in our callers’ questions and concerns.”
The hotline phone number is 888-821-6652.
Businesses can begin preparing the information that will be requested of them once their lender is ready by downloading a sample form here.