The flow of money to small businesses under the government’s $349 billion coronavirus relief plan is picking up momentum, although many company owners are still waiting and wondering.
Money that was held up by technological and legal issues and the sheer volume of applications began arriving in companies’ bank accounts at the end of last week. The Small Business Administration reported Monday that more than 959,000 applications had been approved for over $232 billion from the Paycheck Protection loan program.
The money Amy Power received Friday evening will go toward paying the eight staffers of her Dallas-based public relations company. Revenue is down more than 12% at The Power Group, whose clients include restaurants whose business has been curtailed by the virus outbreak.
“I want to get through this and retain my people,” Power says.
The loans of up to $10 million at an interest rate of 1% carry the promise of forgiveness if the money is used for retaining staffers or rehiring those who have been laid off. They also can be used for rent, mortgage interest and utilities.
The money was arriving as the first economic impact payments under the government’s $2 trillion relief package also landed in Americans’ bank accounts.
The Paycheck Protection Program so far hasn’t lived up to expectations raised by Treasury Secretary Steven Mnuchin, who said in announcing the program that owners could get loan money the same day they applied. But neither the SBA nor banks could turn around hundreds of thousands of loans in a matter of days, let alone hours.
There were other obstacles to getting the money flowing. The SBA ran into computer problems and bankers initially favored their most established customers. Money was also delayed amid confusion between the SBA and banks over loan documents.
Owners were finding that while the government promised less paperwork and quick money, there were still the usual lending processes to be dealt with. Jim Kolea applied early in the program, which began April 3, and didn’t hear until Monday that his truck repair business, PennFleet, had been approved. But he still had a wait ahead.
“We should see paperwork later this week to sign,” said Kolea, whose company is based in Boothwyn, Pennsylvania.
Because the coronavirus has devastated the economy as a whole, some owners don’t feel that the loan money would guarantee their companies’ survival. Julie Goldman got her loan money Monday. She’s going to save the money to pay her five staffers when her company, Original Runner, is allowed to reopen by New Jersey Gov. Phil Murphy. The company manufactures fabric runners used at weddings.
Goldman, whose company is based in Livingston, New Jersey, is worried about her business coming back after life gets back to normal. She doesn’t know if couples planning weddings will want to spring for details like runners.
“No one knows if they can stay open,” Goldman says. “It’s just a real struggle right now.”