The Small Business Administration’s final rules were issued Friday morning on how to apply for funding available from the $349 billion Paycheck Protection Program included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Small business owners are being encouraged to talk with their local financial institution backers for what is essentially a grant to keep businesses afloat during the coronavirus pandemic.
“The biggest thing is, people need to understand this is a loan in name only,” said James Streett, a Russellville attorney who recently coordinated a four-hour community conference call for what turned out to be about 250 local businesses. “It’s not rocket science, but it needs some explaining because a lot of small business owners don’t want to take on any extra debt.”
Streett estimated about 60 jobs were saved around Russellville this week once small business owners understood it was not necessarily a “loan.” There is no cost to apply and no collateral is required, Streett noted.
“Every minute that goes by is a chance another job is dropped and someone could be headed to the unemployment line,” Streett said. “If everyone does this no one should be losing a job.”
Every federal credit union and FDIC-insured bank is authorized to participate.
Beth Presley, vice president of marketing for Arvest Bank, said business owners should speak directly with their bank lenders for specifics but gave a toll-free number to call for those seeking application through Arvest: (877) 483-2940.
“The banks aren’t making any money off of this,” Streett said. “When this social distancing is over they should go and hug their banker.”
Sam Sicard, president and CEO of First National Bank of Fort Smith, confirmed the regional bank is also participating in the Paycheck Protection Program.
Sole proprietors and small business owners with less than 500 employees first became eligible to apply for the Paycheck Protection Program on Friday. Self-employed and independent contractors are expected to be eligible to apply on April 10.
U.S. Senator John Boozman, senior senator for Arkansas, applauded the SBA’s “swift implementation” of the Paycheck Protection Program this week and explained the funding provides for payroll, mortgage interest, rent and utilities, with a portion of the loan eligible for forgiveness.
The Fort Smith Regional Chamber of Commerce has also served as a hub for information on the program.
In addition to the traditional SBA funding programs, the CARES Act established several new temporary programs to address the COVID-19 outbreak, Tonya Sarlls, vice president of operations for the chamber, noted in an email Friday.
Sarlls explained that a business with over 500 employees may also be eligible for the Paycheck Protection Program if it meets certain criteria.
This loan program provides loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7(a) loan program.
Other aspects of the program include:
Up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties.
Small businesses that currently have a business relationship with an SBA Express lender are eligible for access up to $25,000 quickly.
“Our team here in Arkansas is working at a record setting pace to help bring lenders up online and prepare for a full implementation for the Paycheck Protection Program. This is an unprecedented time where the federal government is working seamlessly with industry to help maximize availability of credit to our small businesses,” Edward Haddock, district director for the Arkansas District Office of the SBA, said in a news release through Boozman’s office.
Paycheck Protection Program highlights
The program is retroactive from Feb. 15, 2020, so employers can rehire recently laid-off employees through June 30, 2020.
Eligible recipients may qualify for a loan up to $10 million.
Loan payments will be deferred for six months.
PPP loans can cover payroll, mortgage interest, rent and utilities.
For small businesses that maintain their workforce, SBA will forgive the portion of the loan used to cover the first eight weeks of payroll and certain other expenses.
How to get a Paycheck Protection Program Small Business Loan
Q: How can I apply?
SBA has approved lenders that process small business loans. Talk with your bank to see if it is participating in the program.
Q: When can I apply?
Small businesses and sole proprietors can apply beginning April 3, 2020. Starting April 10, 2020 independent contractors and self-employed individuals can apply.
Q: Does my business qualify?
Small businesses with 500 or fewer employees — including 501(c)(3) nonprofits, veterans organizations, self-employed individuals, sole proprietorships and independent contractors — are eligible. Businesses with more than 500 employees are eligible in certain industries.
More information about the Paycheck Protection Program is on the SBA’s website and at the Department of Treasury.
The U.S. Treasury offers a public warning at its website, stating, “If you receive calls, emails, or other communications claiming to be from the Treasury Department and offering COVID-19 related grants or stimulus payments in exchange for personal financial information, or an advance fee, or charge of any kind, including the purchase of gift cards, please do not respond. These are scams. Please contact the FBI at www.ic3.gov so that the scammers can be tracked and stopped.”
Fraud involving payment of federal taxes should be reported to the Treasury Inspector General for Tax Administration.