Senator Warren explains the COVID-19 stimulus package, and what it means for small business
Senator Warren held a conference call on Thursday with small business owners in Massachusetts. During the call, Warren discussed the key parts of the Senate’s COVID-19 stimulus package that will support small businesses struggling to cope with temporary closures . There were over 600 people from across the commonwealth on the call.
I joined the call in the interest of Groundwork, and to pass along relevant information to our members, friends, and the local community. Here are some key points and highlights.
Paycheck Protection Program
The stimulus bill allocates $350 billion to create a paycheck protection program, providing small businesses, nonprofits, and sole proprietors with no fee loans of up to $10 million. This is different from your typical loan in that it will look backwards at your average payroll to calculate the amount awarded. Business owners can borrow 8 weeks of payroll plus an additional 25%.
Here’s the best part: the loan will be forgiven if you can retain your employees. And even if the loan is not forgiven, your principal & interest will be deferred for up to a year, with no borrower fees.
Some limitations: You can’t have more than 500 employees per physical location. You will be asked to make a good faith certification that the loan is necessary due to economic uncertainty, and that you will use loans for payroll, lease, medical leave, utilities, etc.
How to get it:
While this loan is technically administered through SBA; applications will be administered through banks once the bill is written into law. More details will be forthcoming once the bill is signed into law.
Emergency Economic Injury Grant
Under the stimulus bill, the SBA will advance $10,000 in emergency funds to any small business, nonprofit, or independent contractor negatively impacted by COVID-19. These funds will be delivered within three days of your application being processed, and do not have to be repaid. Yep, you heard me right.
In addition to the emergency funding, businesses can apply for up to $2 million in SBA loans for economic injury. These loans will carry an interest rate of 3.75% for businesses and 2.75% for non-profits.
How to get it:
As with the paycheck protection program, banks will administer the economic injury grants and loans once they are officially signed into law.
Loan payment relief
For any business already holding a standard SBA loan, 7A, 504, or microloan, the stimulus bill would cover your payments for 6 months. In addition, new borrowers who take out a loan within 6 months of the legislation passing will also get coverage on 6 months of payments.
Expanded unemployment benefits
Finally, UI will be expanded to cover gig workers, and independent contractors in addition to traditional employees. The expanded UI will provide an additional $600/week on top of regular unemployment benefits for up to 4 months.
Can you combine programs?
According to the Senator’s staff, businesses can apply for both the paycheck protection program and the emergency economic injury grant. The $10,000 from the grant will be subtracted from the amount you receive from the paycheck protection program.
In her closing remarks, Senator Warren stated that “as big as this investment is, it is still insufficient. We need to do more, and we need to do it soon.”
She added that she hopes that when we look at the stimulus package,
“What we will see is a recognition in Washington of how important small businesses are to our economy and daily functioning.”
And that’s all I got for you, straight from the Senator’s mouth. Best of luck friends, and stay safe and well.
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