Small Business Association Paycheck Protection Program

Yolanda Curtis
April 3, 2020

The Paycheck Protection Program, a key part of the $2.2 trillion package approved by Congress last Friday, provides funds to businesses that have fewer than 500 employees.

Small businesses in Tennessee that have been impacted by the COVID-19 pandemic are eligible to apply for loan assistance through the U.S. Small Business Administration's (SBA) new Paycheck Protection Program.

Starting April 10th, independent contractors and self-employed individuals can apply. "The money will start to go out the door once these applications are processed over the next short period of time". All stories linked in the newsletter are free to access.

"Our hope is that with immediate cash loans and the necessary stimulus to lending institutions, we can help provide the time these businesses need to weather this crisis", David M. Solomon, chief executive of Goldman Sachs, said in a statement.

While Congress could approve more money later on, the program as it stands is expected to run out quickly. "Nearly $350 billion in loans will be available to small businesses including sole proprietors".

Late Thursday evening, Cynthia Blankenship, corporate president of Bank of the West, said she was frantically reviewing the new rules.

"We anticipate more demand than supply", said Tony Wilkinson, president of the National Association of Government Guaranteed Lenders, which represents SBA and other lenders. That could mean applicants who have the financial and legal expertise of a larger organization might be able to maximize their benefits, not leaving much for smaller businesses, especially those who wait or have problems applying.

The administration said PPP loans will be awarded on a first come first serve basis with funding caps in place. "Please go back to them because they're your core bank and they know you the best and can process you the fastest", he said.

The loans do not require SBA approval, and local banks will make credit decisions.

Since this money is going directly to small businesses across the country, and since it's mostly flowing through small community banks it is significantly boosting communities and main street across the country rather than Wall Street.

The banks have moved employees into new departments - a logistical challenge given many employees are working remotely - just to potentially keep up with the flood of applications.

"Just the scale of requests is going to cause the system to break down".

The administration said the website was launched as a collaboration between the Small Business Association, the Michigan Association of Certified Public Account, the Michigan Economic Development Corporation and the Michigan SBDC.

"The two pages of guidance threw it all out the window", said one of the sources, who works at a large bank. Bankers recommend applying for the loans through the bank they already have accounts with to speed along the process as quickly as possible. They will be fully or partially forgiven if businesses show that the money was used to retain or rehire employees and pay some overhead expenses through June 30. The law allows for a maximum interest rate of 4 percent. "The Paycheck Protection Program offers much-needed financial support for our small businesses and their workers to help them get through this tough time".

He said he views the small-business loan effort as a troubled but necessary endeavor.

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