It appears the confusion and chaos that accompanied the rollout of the Paycheck Protection Program has rolled right into this week.
Technical glitches plagued the launch of the nearly $350 billion lifeline for small businesses last Friday. The program offers forgivable SBA loans, up to $10 million, to encourage business owners to keep their staff on payroll.
But last week, local SBA lenders told NBC 7 Investigates the federal government waited until the night before to issue guidelines for lenders – leaving many with unanswered questions just hours before unprecedented demands for loans. And small business owners said the government website kept crashing – with no clear confirmation about whether or not their applications went through.
Now it's Tuesday, and we’re still hearing frustrations from local business owners.
“I am definitely operating in the red,” said Damien Devine, owner of Torpasta Devine Pastabilities in the Midway District.
He used to employ 24 full-time workers in his restaurant. Now there’s less than 10 and they only work two to three shifts a week.
NBC 7 Investigates
“Businesses need help,” Devine said. “This is a really rough time and not just the businesses but the people who work for those businesses and their families.”
As soon as he heard about the stimulus bill and rescue loans for small businesses, he started collecting paperwork – but the process has been anything but clear.
“I kept getting different information from different people,” Devine said.
After reports of banks turning away businesses Friday, Devine said his bank representatives at Union Bank told him to check their website Monday. He did. Devine said there still was no information.
So Tuesday, he went to the bank in person. Now he’s waiting on approval for a $70,000 loan.
“I wish it was a little more organized and clear,” Devine said. “It's causing a lot of anxiety and stress for me and other people too. But I think in the end, it'll be a good thing.”
In an effort to help clear up some of the confusion. Here are some questions and answers for small business owners looking for help:
What does the Paycheck Protection Program loan include?
Small businesses can borrow 2.5 times their average monthly payroll for 2019, maxing out at $10 million with 1 percent fixed interest.
The loan is forgivable if you use it over eight weeks to cover payroll, mortgage interest, rent and utilities (at least 75 percent of the loan must be used to cover payroll costs).
Loan payments are deferred for six months – but again, can be completely forgiven if you can show your lender you’ve kept paying your workers.
Heads up, the forgiven amount falls if the full-time employee headcount falls during those eight weeks. The forgiven amount can also shrink if you cut worker salaries.
I’ve heard a lot about the economic disaster loan. Is it the same thing?
No. The Economic Injury Disaster Loan offers up to $2 million for working capital costs, with a 3.75 percent interest rate for businesses and 2.75 percent for nonprofits.
Eligible businesses can also get an emergency grant of up to $10,000 within.
But if your business also gets a Paycheck Protection Program loan, the $10,000 grant will be subtracted from any amount that gets forgiven.
Here’s more information on the loan from the U.S. Chamber of Commerce.
Who can get the Paycheck Protection Program loan?
If you have fewer than 500 employees and you can show you were in business before Feb. 15, you can apply. This includes independently-owned franchises with less than 500 workers, independent contractors and nonprofit organizations.
What if I’ve laid people off already?
If you cut workers or their salaries between Feb. 15 and April 26, you're OK — as long as you hire them back on with the same pay by June 30.
How do I apply for this loan?
First, you need to fill out a borrower application form. Here’s a link.
Then, you’ll need to a participating financial institution to submit your application. You can either go through a Small Business Association (SBA) lender, or through any federally insured bank or credit union.
The SBA has an online map search tool you can use to find an SBA lender close to you.
