As the country grapples with the impact of the global COVID-19 pandemic, American small businesses are feeling the brunt of the ensuing economic impact. Many are finding ways to adapt and offer products and services in non-traditional ways, many are encouraging patrons to purchase gift cards or advance services, but ultimately the effects on small business are many. To help these vital businesses keep their doors open and weather the economic impact, the federal government recently unveiled a coronavirus SBA emergency loans initiative: The Paycheck Protection Program.
This much-needed relief comes at a time when 96% of small business owners report they are feeling the effects of the coronavirus on their business and more than 50% felt they would not be able to operate for more than three months due to the economic damage caused by the pandemic. In the same survey conducted by Goldman Sachs, only 13% were confident about their contingency plans to meet their business needs.
Paycheck Protection Program
The Coronavirus Aid, Relief and Economic Security (CARES) Act is backed by the federal government and includes $350 billion of funds earmarked specifically to help small businesses maintain their payrolls during the COVID-19 pandemic. These loans, applied for through the Paycheck Protection Program, are 100% federally guaranteed and may be forgiven if the full workforce is kept on payroll for eight weeks and the loan is used for certain business expenses.
On April 3, small businesses that qualify can start applying for these loans through existing SBA lenders (many banks participate in this program) and the program is available through June 30, 2020.
The U.S. Chamber of Commerce developed the Coronavirus Emergency Loans: Small Business Guide and Checklist to provide an overview of the Paycheck Protection Program and help small businesses navigate through these difficult times. The U.S. Small Business Administration has additional information for small business guidance and other loan options.
For banks seeking more information about the CARES Act, join Rob Nichols, President and CEO of the American Bankers Association (ABA) as he leads a panel of experts in this on-demand webinar: What Banks Need to Know about the CARES Act.
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