Small businesses awaiting statuses of loan applications as funds dwindle
Published 12:01 am Thursday, April 16, 2020
Small businesses that applied for Paycheck Protection Program loans and Economic Injury Disaster Loans on March 29 are beginning to receive acknowledgements of their application, according to the director of a local Small Business Development Center.
Linda Tait of the Lamar State College Port Arthur SBDC said the first loans advance her office was made aware of was received in the Houston district Tuesday. The LSCPA office is among 14 locations within the University of Houston Texas Gulf Coast SBDC network.
The U.S. Small Business Administration is administering the $349 billion Paycheck Protection Program and the loans under the Coronavirus Aid, Relief and Economic Security, or CARES, Act, which President Trump signed into law March 27.
“During these unprecedented times, with volumes of applicants we are striving to do our best to meet the needs of the community,” SBA public information officer Susheel Kumar said Wednesday.
Through Monday, according to statistics from the Small Business Administration, 88,434 PPP loans in Texas have been approved for a total of $21,776,306,479, the highest amount for any state. Still, some businesses have not heard on their statuses as the first distribution of PPP funds are dwindling.
Small businesses across America have been approved for $247,543,393,521 through 1,035,086 PPP loans.
The PPP loans are available through local banks and are 100 percent guaranteed by the SBA. The PPP offers loans of up to $10 million at a 1 percent interest rate. These loans mature in two years, but the entire amount of the loan used for payroll and certain operating expenses in the first eight weeks after disbursement may be forgiven if the business uses a minimum of 75 percent of the loan for payroll.
“It is best if you apply at the bank where you keep your business account, but it is not required,” Tait said. “Some businesses bank at credit unions and I am not aware of any credit unions participating in the loan program. Our local banks are doing a phenomenal job pushing these applications through quickly. … The catch to having this loan forgiven is to bring your employment to the level it was prior to the COVID-19 pandemic.”
The Economic Injury Disaster Loan is designed to meet financial obligations and operating expenses that could have been met had the coronavirus pandemic not occurred. Terms of the loan are up to $2 million for 30 years with a one-year deferral on the first payment and 3.75 percent interest rate for businesses and 2.75 percent for nonprofits.
Due to current appropriations, the SBA Disaster Center announced it will make initial loan disbursements for two months of working capital up to a maximum of $15,000 per applicant, in addition to the advance of up to $10,000 each small business and non-profit is eligible to receive. The advance is forgivable, but other portions of the loan are not forgivable.
Applicants for this loan, while receiving the advance, wait to be assigned a case manager, who will then contact the applicant for more information, Tait said. If approved, any advance funds received will be deducted from the loan amount and considered a duplication of benefits. As a result, those funds will not have to be repaid.
Applications are available at: covid19relief.sba.gov.
For further information or assistance, call at 800-659-2955 (or 800-877-8339 for the deaf or hard-of-hearing) between 7 a.m.-7 p.m. Monday through Friday and 7 a.m.-4 p.m. Saturday and Sunday. The center may be emailed at email@example.com.
Additional resources, such as information on debt relief and express bridge loans can be found at sba.gov/coronavirus.
A “Protect Your Business” website that includes a small business resiliency guide, resiliency plan and emergency procedures templates, and a resiliency webinar is available at: americassbdc.org/protect-your-business.