Government loans begin to flow to small businesses
NEW YORK – The flow of money to small businesses under the government’s $ 349 billion coronavirus relief plan is gathering momentum, although many business owners are still waiting and wondering.
Money blocked by technological and legal issues and the sheer volume of requests started to flow into corporate bank accounts late last week. The Small Business Administration reported on Monday that more than 959,000 applications had been approved for more than $ 232 billion from the Paycheck Protection loan program.
The money Amy Power received on Friday night will be used to pay eight employees at her Dallas-based public relations company. Revenue is down more than 12% at The Power Group, whose customers include restaurants whose business has been curtailed by the virus outbreak.
“I want to overcome this and keep my employees,” says Power.
Loans of up to $ 10 million at an interest rate of 1% carry the promise of forgiveness if the money is used to retain staff or rehire those who have been made redundant. They can also be used for rent, mortgage interest, and utilities.
Money was coming like the first economic impact payments as part of the government’s $ 2 trillion relief program also landed in Americans’ bank accounts.
So far, the paycheck protection program has failed to meet the expectations of Treasury Secretary Steven Mnuchin, who said in announcing the program that homeowners could get loan money on the same day they leave. demand. But neither the SBA nor the banks could pay off hundreds of thousands of loans in days, let alone hours.
There were other obstacles to the flow of money. The SBA ran into IT problems, and bankers focused on their more established clients first. The money was also delayed due to confusion between the SBA and the banks over loan documents.
Homeowners found that even though the government promised less paperwork and money quickly, there was still the usual loan processes to go through. Jim Kolea applied at the start of the program, which began April 3, and only learned on Monday that his truck repair business, PennFleet, had been approved. But he still had expectations.
“We should see the paperwork later this week to sign off,” said Kolea, whose company is based in Boothwyn, Pa.
Because the coronavirus devastated the economy as a whole, some owners don’t think the loan money would guarantee the survival of their business. Julie Goldman got her loan on Monday. She will save money to pay her five employees when her company, Original Runner, is authorized to reopen by New Jersey Gov. Phil Murphy. The company manufactures fabric rugs used at weddings.
Goldman, whose company is based in Livingston, New Jersey, is worried that his business will return once life is back to normal. She isn’t sure if couples planning weddings will want to research details like runners.
“Nobody knows if they can stay open,” Goldman says. “It’s just a real struggle right now.”
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