Paycheck Protection Program With No Money; Thousands of small businesses are closing
A key element of the federal government’s stimulus measures to help small businesses and their employees left out of money and shut out thousands of potential borrowers seeking help amid the economic slump caused by the coronavirus.
The US Small Business Administration announced Thursday morning that the paycheck protection program would not accept any further applications for the $ 349 billion program. The agency reported that it has approved more than 1.6 million paycheck protection program loan applications totaling more than $ 339 billion from over 4,900 financial institutions.
While this money has been approved, most borrowers are still waiting for these loans to be funded – and for the money to even show up in their accounts.
“America’s small businesses are on the brink, desperately trying to keep their doors open and support their employees,” said Brad Close, president of the National Federation of Independent Business, a Washington, DC advocacy group that worried every day members that the $ 349 billion loan program would dry up before help reached them. Today their worries have become a reality. “
The Paycheck Protection Program loans have an extremely low interest rate of 1% and interest on the loans does not have to be paid for the first six months. The program focuses on helping companies with 500 or fewer employees.
But the biggest perk of the Paycheck Protection program, launched nearly two weeks ago, is that borrowers who don’t lay off workers for the next eight weeks will have their loans waived – principal along with interest. This created overwhelming demand for the loans, but also confusion as more than a million companies struggled to get them.
Despite the demand, some economists have andsay the PPP loans are a bad match for what they are currently in need of amid a pandemic that has forced them to close their doors.
Some entrepreneurs who applied early on say they are still waiting for their money. One major bank said it still had tens of thousands of applicants waiting for their loans to be approved, despite the SBA announcing the program has been exhausted.
Monty Bennett, the CEO of hotel chain operator Ashford Inc., worked non-stop with five employees over the first weekend of the program to submit his loan applications. Hotel operators have been particularly hard hit by forced closings across the country, and Bennett has had to either fire or take leave of most of his employees.
Hotel chains are allowed to apply for PPP loans, but must apply for each hotel property individually to stay below the SBA’s 500-employee cap for small businesses. Bennet said he hoped to use the PPP money to reinstate some of his employees, but only a handful of the 129 individual hotel applications he filled out had been approved.
He also reports that no money has appeared in his company’s accounts: “None funded. A small fraction approved, “said Bennett on Thursday. “The whole thing was extremely frustrating.”
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4 Free Resources Small Businesses Can Access Right Now
By Jeanne Sahadi, CNN Business
(CNN) – In a race to save their businesses, small business owners have tried to stay afloat while trying to navigate a complex web of federal and state aid and figure out their legal options.
Many have had to do everything on their own because they cannot afford expensive lawyers, auditors and management consultants. And most are facing a financial crisis made worse by the fact that they are still awaiting payments for jobs that were completed before the coronavirus shutdown.
For those who can’t afford the help, here are some of the programs, organizations, and initiatives that offer small business owners personal advice, tools, and other support – all for free.
1. Free legal advice
The Lawyers for Good Government Foundation, which works in partnership with local small nonprofits, has begun providing pro bono legal advice to small business owners in cities and states across the country.
the first clinic was launched in New York City last week. In the next two weeks, the program will start in the states of Florida and Washington, as well as in the cities of Atlanta, Detroit and Charlotte, North Carolina.
The program, which also helps non-profit organizations, is aimed primarily at small businesses – in New York, for example, only those with 100 or fewer employees qualify. But each location decides how small a company has to be.
Small business owners seeking help will include their most pressing legal issues related to the coronavirus on an admission form so they can be connected with an attorney who is experienced in these areas. In addition to remote consultations, attorneys will also direct pro bono clients to additional resources.
So far, questions have focused on the new federal loans and grants available through the federal aid package, labor and bankruptcy laws, and the obligations that owners of so-called negligible small business owners have under commercial leases and contracts even though their businesses have been closed.
While the program may not be able to meet every small business’s request for pro bono counseling, the hope is to help thousands, if not tens of thousands, said Traci Feit Love, LGGF’s executive director.
Small business owners interested in being notified when legal counseling opens in their area can enter their contact information here.
2. Free business strategy advice
The program GAME BOARDFunded in part by the Small Business Administration, has been in existence for more than 50 years and includes a network of 10,000 volunteer mentors who are current or retired business owners and experts in key business and industry topics.
the Mentors are available for free remote consultations – as many as needed – for every small business owner. They are currently assisting businesses with many questions and concerns related to Covid-19, including how best to care for that Paycheck Protection Program Loans and the disaster aid offered by the federal government for economic damage and determining how best to use the funds, if approved.
If a small business is not awarded any of the federal aid it has applied for, SCORE will help it find the next steps, including finding alternative sources of funding.
While SCORE will work with any small business owner, its typical customer has fewer than five employees and less than $ 500,000 in annual revenue, said SCORE CEO Bridget Weston.
3. Free interactive tools to help you determine PPP loan eligibility
Intuit just launched free interactive tools called. are known Intuitive aid assist which enables any small business owner or independent worker to assess whether they qualify for an Eligible PPP Loan or Disaster Grants for Economic Damage from the Small Business Administration. It also helps them assess how much money to apply for and how much of the PPP loan would not have to be paid back if used for approved expenses.
Addressing privacy concerns, Intuit said it would not collect data on small businesses using the tool, according to an email from Intuit’s chief innovation officer, Bharath Kadaba. “Information is only stored locally in the user’s browser.”
And while Intuit itself has just received approval to issue PPP loans – and like other lenders will earn fees for each loan – Kadaba said that users of the interactive program will not be tricked into applying through Intuit, but one published list of authorized lenders available through the SBA.
4. A campaign to get customers to pay small businesses faster
Small businesses now need money to keep their doors open. Yes, federal and state aid will be crucial. But it would also be of great and immediate help to only get paid by customers for the work they have already done.
Fundbox, a business-to-business payment processor and small business lender, estimates that small businesses with fewer than 100 employees would owe $ 900 billion on any given day.
A business owner told CNN Business that if he were only paid for the jobs his company already did, his cash reserves would increase by a month. Typically, small business customers make the last payments 30 days or more after an order has been completed.
This is why Fundbox and other small business support companies just started a campaign called. started #pay today to encourage large businesses and government agencies to expedite payments to small businesses.
Given that many small businesses don’t have enough cash for another month, withdrawing in 10 to 15 days can make a significant difference compared to 30 if they leave the lights on until they get government help. Businesses that want to move up today and do what is most useful to help small businesses can make their promise public by joining the #paytoday club here.
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