ODESSA, Texas (Big 2/Fox 24) – Thousands of small businesses in America have been hit hard by the coronavirus pandemic. Many employers are forced to layoff employees, or worse, close their doors completely. The Small Business Administration has announced a new loan, however, that could help small business owners financially.
The Paycheck Protection Program is federal loan designed to help small business owners with payroll. It is part of the $2 trillion CARES Act that was signed by President Trump on March 27th. Director of Small Business Development Center at UTPB, Tyler Patton, says there is no better time for owners to apply then now.
“People need to be proactive when applying for this,” explained Patton. “Even if you don’t need it today, go ahead and apply, because you may need it a week from now.”
Patton says banks receive thousands of applications daily, and it is crucial to act fast. With so many applicants, the priority is being given on a first come, first serve basis.
“Basically what you can qualify for is 2.5 times your average monthly payroll. Now, it starts as a loan with 1% interest with a payback period of two years. However, a good chunk of that that loan can be forgiven and turn into a grant, which you do not have to pay back.”
In order to be forgiven, you would need to maintain that payroll until the disaster is over. 75% of the loan must go towards payroll. Patton advises business owners to check with their primary bank first. If your bank does not have a SBA representative, you can find the list of participating lenders here.
“People who have loans with them or accounts with them, they’re going to prioritize them first,” said Patton. “You know, be proactive but you’re also going to have to be persistent and patient.”
Patton says it is crucial our small businesses stay afloat and survive through the pandemic, as more than 70 percent of gross domestic product is generated by small businesses in the U.S. But while these grants and loans seem like life-savers, it is important to make sure you are staying vigilant. There have been reported scams of people pretending to be with the Small Business Administration offering money. Patton says if it is too good to be true, it probably is.