On Thursday morning, the United States government officially tapped out its $349 billion emergency fund dedicated to the Paycheck Protection Program funding via the Small Business Administration. The money lasted less than 2 weeks before being exhausted.
Part of the $2 trillion stimulus package, these loans were paid out to small businesses to help them through the economic shutdown that has accompanied the global coronavirus pandemic. Small businesses with fewer than 500 employees can access up to $10 million at a rate of 2.5 times average monthly payroll costs. The interest rate on the loans is very low (it was originally half-a-percent, which was increased to 1 percent) to be paid back over 2 years – with repayments deferred for the first 6 months.
For businesses that retain all of their employees, and don’t reduce payroll costs by more than 25%, the amount spent on qualifying expenses over the next 8 weeks is forgiven. That means that for many small businesses, this ‘loan’ was due to turn into, effectively, a grant.
that continued to pay employees through the quarantine period.
While many businesses wait in line, unable to access the loans, the United States Congress is debating details over re-funding the program. You can read the finer points of the debate here, from CNN.
This impacts swim teams, as many were dependent on these SBA loans to continue paying their coaches through the shutdown. Almost every swim team in the country was eligible for the programs, and many of the programs launched by Local Swimming Committees around the country required teams to apply for this SBA funding before receiving money out of the LSC coffers.
For teams that are unable to continue hosting training, and have lost membership dues as a result, this is another financial blow.
Many banks are still processing loan eligibility while the funding isn’t there, which would allow payouts to be made quickly upon funding, so teams are encouraged to still apply if the funding is something they need.
The CARES Act was signed into law on Friday, March 27. On Monday, March 30 I contacted our club’s bank to ask about the PPP application. For two weeks I received nothing but generic email replies listing their application order. Finally, this past Wednesday afternoon (two weeks later) I was notified we could apply, which we did. Thursday morning we were notified by email that the program was out of funds. US Bank intentionally pushed all non-profits to the back of their queue. We’re changing banks.
Same for Chase Bank!
Same exact experience with Chase…
Establish a relationship with a good community bank that will give a crap about you, and would have ensured that you get to the front of the SBA line.
I love how companies like Shake Shack and Ruth Chris qualified as small businesses. /s
Teams should still apply and get in the queue. The money will be refreshed – do not wait!
Call your congressman
Blast Marie Antoinette eating her expensive ice cream in SF