As the coronavirus and Covid-19 keep spreading, their effects are being felt at every level. While no one is immune to the economic ramifications, for small business owners, there is some good news. The U.S. Small Business Administration is providing a way for small businesses to rehire or keep their workforce employed while we ride out this health crisis. The government-backed Paycheck Protection Program offers small businesses funds that enable them to pay up for payroll costs, including benefits, for up to 8 weeks. These funds can also be put towards paying interest on rent, mortgages, and utilities.
In an effort to reverse, however slightly, the ever-growing unemployment rate, government-backed funds are provided in the form of loans that will be fully forgiven when used for payroll costs, rent, mortgage interest, and utilities. (As there will likely be a high demand for loans, in order for them to be forgiven, at least 75% of the amount must have been allocated to cover payroll expenses). For any portion of the loan that small business owners will have to pay back, payments will be deferred for six months to further help them keep their businesses – and the economy – going. In addition, to ensure that this money gets allocated and, in turn, used to spur employment as quickly and smoothly as possible, no collateral or personal guarantees are required from those small business owners who apply for it. Another benefit is that neither lenders nor the government nor will charge any small businesses fees.
Must Keep Employees on the Payroll—or Rehire Quickly
Forgiveness of the loans depends on the employer being able to maintain a workforce or quickly rehire employees and then sustaining their salary levels. The following will reduce the loan forgiveness: if there is a decline in full-time headcount or if there is a decrease in salaries and wages. However, as mentioned, for those small business owners who use at least 75% of the funds to cover payroll costs, they can consider this loan totally forgiven and, therefore, as if they received free money. This is a win-win-win for them, their employees, and the economy.
All Small Businesses Eligible
So, who is eligible to receive this loan? Small businesses that employ up to 500 workers—including veterans organizations, nonprofits, tribal concerns, sole proprietorships, self-employed individuals, and independent contractors— can apply. Businesses that employ more than 500 workers are eligible in certain industries.
When to Apply
As of April 3, 2020, small businesses and sole proprietorships are eligible to apply for the loan. As ofApril 10, 2020, those who are self-employed and independent contractors can also apply.
We encourage you to apply as quickly as possible because there is a funding cap.
For help with the application process, visit www.paycheckprotected, and let SolidBlock assist you in getting the money you need as quickly as possible to save your business.