For the thousands of Arizona small businesses that have been negatively affected by the paralysis afflicting the American economy because of Covid-19, Friday, April 3, 2020 is the most important day on the calendar.
That’s the day the Treasury Department and lenders around the country open up the Paycheck Protection Program to applicants and begin issuing forgivable loans—grants, really—into the accounts of small businesses so they can meet their payrolls, pay mortgages, rents, and utility bills.
The Paycheck Protection Program is a lifeline. For many small businesses, it will be the difference between staying open and shuttering forever.
The most important thing any elected official, business organization, or anyone with a platform of any sort can do right now is to encourage all small businesses with a headcount up to 500 to apply for the program. And sole proprietors, too. And independent contractors. And 501 (c)(3) non-profits. Gig workers? Yes. The eligibility is broad and everyone who can apply, should.
In fact, if you’re in the hospitality industry and you’ve got multiple locations, you’re eligible to treat each location as a separate entity eligible for assistance.
The program is designed to issue funds as quickly and as easily as possible. Lending institutions that already participate in the Small Business Administration’s 7(a) program can process loans, but so can any other FDIC-approved bank or credit union. That means the bank or credit union where you already do business. And the expectation is that funds will be issued within 48 hours of application.
While the majority of business costs are totally forgivable, any portions that aren’t will be capped at a .5% interest rate. No collateral or personal guarantees are required. Borrowers won’t get hit with fees from the government or from the lender, either, and loan payments will be deferred for six months.
The Treasury Department and the SBA have each set up websites with helpful overviews (Treasury, SBA), including the sample application, and the U.S. Chamber of Commerce, which has been an invaluable advocate on behalf of job creators of all sizes throughout this crisis, has prepared an excellent checklist and guide to the program in English and Spanish.
Nearly 10 million Americans applied for unemployment benefits in just the last two weeks. A record number of Arizonans have sought unemployment insurance benefits, far exceeding the levels established during the Great Recession. I fear it’s going to get worse before it gets better. But we can manage this problem.
The American economy will eventually open up again and begin to function with some semblance of normalcy. Until that time, the Paycheck Protection Program is an absolutely indispensable tool to prevent a total economic collapse and make the road to recovery less rocky.