A flurry of programs and resources has been enacted to provide small businesses affected by the coronavirus pandemic and the closures intended to halt the spread.
Paycheck Protection Program
Among the latest is the Paycheck Protection Program. The loan program is part of the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $350 billion loan program designed to infuse financial relief to the country’s small businesses. The Paycheck Protection Program provides federally guaranteed loans to supply small businesses with enough cash flow for several weeks so they can retain employees, pay for group health care, make payroll and cover expenses such as rent and utilities.
The Paycheck Protection Program is available through June 30, 2020.
The program does not charge a fee to apply.
The program serves as a big tent to help cover a wide range of businesses. Standards include being a small business, which in most categories means having fewer than 500 employees. Sole proprietors, independent contractors and the self-employed all qualify. Private non-profit organizations adversely affected by the pandemic can also qualify.
In some industries, even businesses with more than 500 employees may be eligible, if they meet the Small Business Administration (SBA) size standards for their industry.
Unlike other loans, the Paycheck Protection Program loans do not require collateral. Nor does it require that the business have no other source of credit.
Partial loan forgiveness
In the eight weeks after the loan signing date, the loan money spent on payroll, utilities rent or mortgage interest can be forgiven.
Forgiveness requires that the business retain or quickly rehire its employees and maintain salary levels. At least 75% of the forgiven amount must have been used for payroll.
The utility service, mortgage or rent must have been signed before Feb.15, 2020, to qualify.
When applying for loan forgiveness, business owners will be asked to present detailed support documents.
How to apply
Apply quickly! Lenders may begin processing loan applications as soon as April 3, 2020.
Small businesses can apply through any existing SBA7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.
Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. Businesses should ask their local lenders whether they are participating in the program.
Get online training to apply for SBA loans
The U.S. Small Business Administration’s West Virginia District Office and the West Virginia Small Business Development Center are partnering to host trainings on the Economic Injury Disaster Loan program, Economic Injury Disaster Loan Advance, and the Paycheck Protection Program.
The training sessions are free, but limited to the first 100 participants.
To see the schedule of training opportunities and to register, click here.