$2 Trillion Stimulus Package Helps our Local Economy
The President recently signed into law a $2.2 trillion stimulus package representing the largest emergency aid funding in US history. It is an enormous financial injection into our economy aimed at helping American workers, small businesses and industries affected by spread of Covid-19.
Small Business Support in the CARES Act
(H. R. 748 Coronavirus Aid, Relief, and Economic Security Act)
$350 Billion for Small Business Support
Companies with 500 or fewer employees can benefit from up to $10 million in loans to continue paying workers. Loans are forgivable under certain circumstances.
The Paycheck Protection Program supports small businesses that maintain their payroll. It provides eight weeks of cash-flow assistance through federally-guaranteed loans. Under the program, if a covered business meets all of the SBA’s criteria, including use of loan proceeds for covered expenses, the SBA may forgive the loan. This could help affected small businesses and our economy to recover quickly from this crisis.
Employers are able to delay paying their 2020 payroll taxes until 2021 and 2022 to allow for extra cash flow.
The U.S. Small Business Administration is required to pay all principal, interest, and fees on existing SBA loan products for six months.
The Treasury Department website provides additional information on the CARES Act with emphasis on assistance for small businesses:
Keeping American Worker Paid and Employed Act
This act should be of special interest to businesses in our region who want to keep their employees on the payroll, pay their bills, and be prepared to thrive once the Coronavirus pandemic subsides.
Owners of small businesses that are affected by the COVID-19 pandemic can apply with us for loans to pay up to eight weeks of their payroll costs including benefits. Loan funds can also be used to pay rent, utilities, and interest on mortgages. These loans can be forgiven when the government’s stipulations are met: https://home.treasury.gov/system/files/136/PPP--Fact-Sheet.pdf
(The interest rate of 1% will not be forgiven.)
We started accepting applications last week and began uploading them to the Small Business Administration for approval over this past weekend. As of late Sunday evening, we had already processed $8.4 million in loan applications from businesses in our communities. We are doing our part to help local businesses remain open and keep their employees on the job.
We recommend that our business customers move quickly to apply. There is a federally mandated funding cap and applications are processed in the order they are received. Please contact your branch manager or our Commercial Lending Department at 276.783.3116 to get started.
Starting April 10th, independent contractors and self-employed individuals can apply.
We are experiencing a large number of applications and expect that to continue. We are processing applications as rapidly and efficiently as possible. However, we ask your patience as we work to help keep our customers’ businesses open and their employees on the job.
Here is a more in-depth summary of the Act:
The Act provides $377 billion to help prevent workers from losing their jobs and small businesses from going under due to economic losses caused by the COVID-19 pandemic. The Paycheck Protection Program provides eight weeks of cash-flow assistance through 100 percent federally guaranteed loans to small employers who maintain their payroll during this emergency. If the employer maintains its payroll, then the portion of the loan used for covered payroll costs, interest on mortgage obligations, rent, and utilities could be forgiven, which would help workers to remain employed and affected small businesses and our economy to recover quickly from this crisis. This proposal would be retroactive to February 15, 2020 to help bring workers who may have already been laid off back onto payrolls.
Paycheck Protection Program
- The bill provides $350 billion to support loans through the Paycheck Protection Program for:
- Small employers with 500 employees or fewer, as well as those that meet the current Small Business Administration (SBA) size standards;
- Self-employed individuals and “gig economy” individuals; and
- Certain nonprofits, including 501(c)(3) organizations and 501(c)(19) veteran organizations, and tribal business concerns with under 500 employees.
- The size of the loans equals 250 percent of an employer’s average monthly payroll. The maximum loan amount is $10 million.
- Covered payroll costs include salary, wages, and payment of cash tips (up to an annual rate of pay of $100,000); employee group health care benefits, including insurance premiums; retirement contributions; and covered leave.
Owners of small businesses affected by the COVID-19 pandemic can apply with us for Paycheck Protection Program loans. Call us at 276.783.3116 and speak with one of our commercial lenders.