With President Donald Trump having signed an unprecedented $2 trillion economic stimulus package aimed at supporting U.S. businesses and individuals, you're probably wondering what it all means for you as a small-business owner.
Businesses with fewer than 500 employees may qualify for loans that make up $350 billion of the overall relief package. Additionally, businesses with more than 500 employees--usually considered the upper threshold for the small-business distinction--are eligible for the loans if they operate in the food or accommodations industries or are nonprofits or veterans' organizations. Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce, shared the details of what's being called the Paycheck Protection Program with Inc. editor-at-large Kimberly Weisul at the National Small Business Town Hall, a live webinar hosted Friday by Inc. and the Chamber.
Bradley said he believed business owners can expect the loans to be available within two weeks. Asked if he thought one week was possible, he replied: "I would bet that if we were doing this call next week, we would be talking to folks who have already applied for the loans and were in the process of receiving it."
The maximum value of a company's loan is based on that company's average monthly payroll cost in 2019--including wages for employees making under $100,000, as well as expenses for paid sick leave, health care, and other benefits--multiplied by 2.5. That equals 10 weeks of payroll expenses. The maximum loan size available is $10 million.
Bradley pointed out that the program has some important distinctions when compared with traditional government loans. Businesses won't need to try to get a loan elsewhere first and won't need to provide a personal guarantee or collateral. Bradley advised that small businesses begin calculating their average monthly payroll costs from 2019 now so they can expedite processes once they go to their lender.
Importantly, the small-business loans can be converted into forgivable grants so long as the company doesn't lay off employees. Payroll costs for laid-off employees won't be forgiven. For each employee who makes less than $100,000, companies can reduce their wages by up to 25 percent before the amount of loan forgiveness begins to decrease.
Panelist Marilyn Landis, CEO of CFO services company Basic Business Concepts, added that companies should visit SBA.gov to ensure that they're eligible for particular loans before they go through the process of applying. She also pointed out that the package contains aid for expenses beyond payroll depending on a business's industry. "Identify what you need, then find a program that appears to address that need," she said. "Then investigate whether there are unique things about that program that apply to you or your industry."