The grim reality caused by the lockdown imposed to slow the spread of the coronavirus pandemic is being felt by small businesses throughout the country. Many of them are facing extreme difficulties and possible bankruptcy, with little or no income from consumers who are forced to stay home. The federal Payroll Protection Program was initiated to help small businesses, so they wouldn’t have to lay off employees while businesses are closed. Here is another great resource for your business.
How It Works
Small businesses which have fewer than 500 employees may be eligible to apply for a federal loan with a $10 million ceiling in order to allow the business to stay alive. This is not like any ordinary loan however, which needs to be paid back over a period of time. Some part of the loan, and in many cases the entire loan, is actually forgivable when the phones are used to pay for employees’ insurance premiums, sick leave, medical leave, or employee salaries.
In addition, as much as 25% of the loan could also be forgiven if the funds are used to to pay for other expenses which contribute toward keeping your business going. These types of expenses would include rent, utility payment, mortgage interest, and interest on loans which were arranged prior to February 15, 2020. There are also a number of other minor expenses included in the forgivable category, and these can reduce your overall indebtedness after receiving a loan through the program.
Other Details About the Program
Even though the Payroll Protection Program is funded with approximately $2 trillion, it’s still not nearly enough to save all the small businesses which are expected to apply for funding. The Small Business Administration is administering the program, and fully expects there to be more applicants than available funding. Applicants will be approved on a first-come, first-served basis, which means that the sooner you apply for funding, the better your chances are of being approved, and receiving those life-saving funds for your business.
Having Trouble Meeting Your Business Payroll?
Many small businesses have difficulty meeting payroll and paying for other normal expenses when incoming revenue is erratic. Contact us at Aspen Commercial Lending so we can discuss some ways your business can maintain positive cash flow.
One of our partners, Altitude Payroll, has a great resource site for more information on the Paycheck Protection Program.