More coronavirus relief on the way for small businesses
NEWYORK— ForNancy Sinoway, a second coronavirus relief loan would increase the chances that her dressmaking business will survive.
“I could use it formarketing, for new samples. I could use it as a lifeline,” Sinoway said. She was flooded with order cancellations starting in early March as the virus spread and large gatherings and eventswere abandoned.
Sinoway got a Paycheck Protection Program loan last May and used it to pay her three employees. But the loan money fell far short ofwhat she needed to maintain her shop in Port Washington, New York. She was forced to close it andmove the business into her home.
Millions of business owners like Sinoway are about to get help. TheSmall Business Administration and the Treasury Department are preparing to revive the PPP fivemonths after its first two rounds of funding ended.
In the latest round, businesses that received loans last year will be able to borrow up to $ 2 million as long as they have no more than 300 employees and sufferedat least a25% drop in quarterly revenue. Firsttime borrowers with no more than500workers will be able to borrowup to $ 10 million.
The loans, which can be forgiven, willhavefive- year terms and carry an interest rate of 1%.
The SBA will initially accept only applications submitted by community financial institutions, or CFIs, lenders whose customers are minority- ownedandeconomically disadvantaged businesses. StartingMonday, applications for first- time borrowers submitted by these lenders will be accepted, followedby applications for second loans onWednesday.
SBA said it would begin accepting applications from all its lenders within a few days of that initial period reserved for CFIs.
Loan amounts are calculated using a company’s payroll expenses; businesses can use either their 2019 or 2020 payroll to compute how much they can ask for.
Companies will have 24 weeks from the date they receive a loan to use the money. While 60% of the proceeds must be used for payroll in order for loans to be forgiven, companies can use the rest for employee health benefits, mortgage interest, rent, utilities and expenses that are essential to business operations.
The PPP is being restarted under the coronavirus relief bill Congress approvedinlateDecember, providing for $ 284 billion in new loans. The first two rounds, which began April 3 andendedAug. 8, gave out more than 5.2 million loans worth $ 525 billion.
But for many businesses, including restaurants, gyms and retailers that depend on people gathering in large numbers or in close quarters, the money was nowhere near enough as the pandemic continued longer than anyone expected.
It’s estimated that well over 100,000 small U. S. businesses have failed since the outbreak began.