Though there’s plenty of uncertainty about how and when everything will shake out, every small business owner who is eligible should take advantage of the $349 billion forgivable loan program that kicked off Friday.
Several local businesses are already in the queue to get their loan approved, and banks are working around the clock to sort through a massive influx of applications.
“I think at this point every business ought to apply,” said Greg Floyd, owner of Ole South Bar-B-Q. “If they haven’t had money set back and saved for a rainy day, then they’re hurting. I feel good about the position I’m in, but I feel for the other businesses.”
The Paycheck Protection Program (PPP) authorizes up to $349 billion in forgivable loans to small businesses — meaning less than 500 employees — to pay their workers during the COVID-19 crisis, and it is part of the massive federal stimulus package.
The loan amounts will be forgiven as long as:
• The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the eight-week period after the loan is made
• Employee and compensation levels are maintained (Businesses have until June 30 to restore full-time employment and salary levels for changes made between Feb. 15 and April 26.)
The Small Business Association is backing the loan, which can only be forgiven if no more than 25% of the amount is used for non-payroll costs.
“The incentives are tied to the target of keeping people working, meaning that if you keep everybody on and working through this, it basically becomes a grant,” said Drew Watson, private wealth advisor at Align Wealth Management and former chairman of a national bank. “It would be hard for me to imagine that a small business wouldn’t want to do this.”
With so many uncertainties — ranging from how long the pandemic will last to what the next limitations may be to simply how a business will operate — getting the loan is just as much a stress relief as it is a financial one.
“Right now the most important part is peace of mind because we don’t know what’s going to happen,” said Matt Weafer, owner of Niko’s Bakery and Cafe. “I don’t know what mandates are going to come across as far as restrictions for restaurants if they do anything further. This simply allows me to make sure I can continue to pay my staff and keep the doors open regardless of the ups and downs.”
A major factor in why there are so many questions is the quickness with which the need arose. With businesses closing at such a rapid pace in a short period, there was little time to prepare.
“This program would have probably been unthinkable 60 days ago,” Watson said. “That’s how quickly the world changed. This appears to be what they think is the quickest way to get liquidity into the system and maintain employment.”
Though some banks spent a couple of days having to adjust to doing SBA loans, German American Bank was ready to hit the ground running.
“We studied hard and prepared ourselves and put plenty of information out, and the minute we could go on Friday, we went,” said Regional President Amy Jackson. “As a community bank, it’s our responsibility to be a part of the solution for our customers in these types of situations. It wasn’t considered not to do it for us.”
Similarly, Independence Bank Marketing Director Bridget Reid said they were working through the day and night making sure customers’ needs are met.
“Independence Bank is diligently working with our customers through this process so that we can continue to keep our communities strong,” she said. “As a community bank, we are here to serve, and they need our support now more than ever.”
Still, that doesn’t mean they have all the answers, and that can be tough to accept for business owners during these troubling times.
“It’s frustrating not knowing, but I feel like our government in general has done a good job to try to put all this together in a short period of time,” said William Holland, president of Holland General Contracting. “I think (the loan) is going to help, but it’s still an unknown when we will return to some sense of normalcy.”
There’s also the concern of what comes next if things don’t get back to normal after eight weeks. Will the funds last through the two-month period to begin with, and what happens if more are needed?
“I think time will tell,” Jackson said. “People are still just figuring out the program and trying to make sure they make prudent decisions. I think our government will do the same. It very well could be that more funds (will be) available.”
Weafer said he doesn’t think things will return to standard after just eight weeks — even saying he expects some industries to struggle into the fall months.
“Every day is hard, and the next day is harder,” Weafer said of the restaurant industry. “It’s always just one day at a time. If it wasn’t this challenge, for me it was going to be another challenge. Every challenge brings an opportunity.”
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