Small businesses’ opportunity to apply for their piece of the initial $379 billion CARES Act funding has come and gone. Overwhelmingly popular, the National Federation of independent Businesses reports that 70% of its 300,000 members applied for loans.
With legislation stalled in Congress to add an additional $250 billion to the program, tax attorney Logan Gans, partner with Shutts & Bowen law firm, says getting bank approvals and funds out to small businesses has been bumpy at best. “Certain banks are moving faster than others, and community banks seem to be moving faster than the larger banks.”
The most popular and best funded provision in the CARES Act is the Paycheck Protection Program (PPP) which provides $349 billion forgivable loans if funds are allocated to cover 2.5 months of payroll. In addition, $10 billion is allocated for an Economic Injury Disaster Loan (EIDL) and $17 billion to cover six months of principal and interest payments for and Small Business Administration-backed loans.
Overall, he says, “At the end of the day, independent retailers are going to have to cobble together multiple programs to get them through,” advising retailers to also look to their states for additional funding.
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In addition, the Federal Reserve Board has set aside $2.3 trillion funds for a Main Street loan program for businesses up to 10,000 employees or up to $2.5 billion in 2019 annual revenues. But with loans starting at a minimum of $1 million, this program misses the mark for most Main Street retailers.
Source: Forbes