- Small Business Administration already committed 10% of Paycheck Protection Program’s $349B in forgivable loans to small businesses
- Independent contractors and self-employed workers very worried there won’t be enough money left for them
Under the auspices of the $2.2T economic stimulus package titled the Coronavirus Aid, Relief and Economic Security Act (CARES), the Small Business Administration’s (SBA) Paycheck Protection Program is designed to pay out some $349B in forgivable loans to small businesses with 500 or fewer employees and to independent contractors and self employed workers. Small businesses could qualify to have 8 weeks of their loan forgiven if they maintain their staff and payroll and use the loan to pay expenses such as payroll and rent.
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Demand for this loan program instantly skyrocketed. According to Larry Kudlow, director of the National Economic Council, said the SBA had already approved 130,000 loans to the tune of $38B, or 10% of the program pot, as of Monday morning, April 6, just 3 days after the program was operational for business owners and sole proprietors.
Many small business owners and sole proprietors are worried the money in this program will run out before their applications are even processed.
Self-employed workers and independent contractors are much more worried than small business owners and sole proprietors that the money will run out before they can even apply for this relief package and rightfully so. Small business owners and sole proprietors could apply for the program on April 3 while independent contractors and self employed workers had to wait until April 10, a full week later, to apply.
Another problem for many of these potential loan recipients is that banks, the usual starting place for the applicants, haven’t been able to offer proper guidance to their clients concerning these loans. Why? Some bank customers run their business invoices through a personal bank account and don’t have business accounts. Any such “glitch” takes more time…and any extra time taken by the bank to work out procedures may translate into there being less or no money remaining in the program pot when the bank finally figures out what to do.
Possible good news for these relief programs is that both Republican and Democratic leaders of Congress are encouraging more money into program pots. Senate Majority Leader Mitch McConnell is proposing an additional $250B and Speaker of the House Nancy Pelosi and Chuck Schumer, Senate Minority Leader, are proposing an additional $500B. Each Chamber is hoping to vote on these additional life program funds by the close of business April 10 or the following week at the latest.
Thanks to HousingWire and National Public Radio.