RICHMOND, Va. (WRIC)- The largest ever small business loan program is ramping up on Friday, according to the Small Business Administration.
The Paycheck Protection Program makes up $349 billion of the $2.2 trillion federal stimulus package that President Donald Trump signed last week.
“It’s really not a regular loan, it’s completely forgivable,” said Steve Bulger, Mid-Atlantic Regional Administrator for the SBA. “There has never been anything like it.”
Bulger said the coronavirus is the biggest crisis that the SBA has faced in it’s 67 year history. It’s prompting an “unprecedented” federal response that could save businesses like River City Diner.
The family business is struggling to keep their family afloat amid a 90 percent drop in sales. Assistant General Manager Terri Johnson said, for now, they’re still finding a way to pay almost all of their 45 employees, including with an online fundraiser. Johnson said they can’t hold out much longer without federal assistance.
“It means everything,” Johnson said. “If we don’t get the stimulus package then we don’t survive.”
Beginning on Friday, Bulger said business owners should ask their banks about applying to PPP. He said the federal government will pay each business up to $10 million dollars for 8 weeks. The loan amount is based on average monthly payroll.
The loan is will be forgiven in its entirety if a business uses 75 percent or more to pay salaries and benefits for their employees. They can also rehire staff members that were laid off due to coronavirus.
The remaining 25 percent of the money can be spent on rent, utilities and other overhead costs.
“When it’s over, the business will be in a position to just turn on the engine and start going again,” Bulger said.
Bulger said the PPP is specifically designed to keep employees on the payroll but other loans are available through the SBA, such as the Economic Injury Disaster Loan.
“It definitely gives you more flexibility on how you can spend the money, however, that is not a forgivable loan. It does have to be paid back in up to 30 years,” Bulger said.
Bulger said the SBA has streamlined the application process for PPP. Business owners need documentation of their average monthly pay roll to apply but they don’t need credit score information, for example.
“The risk is if we move it out too quickly without enough safeguards there’s going to be some fraud and that could be a problem because we always want to protect taxpayer money,” Bulger said. “The reward is we can get the money out fast.”
Carl Knoblock, Richmond’s SBA District Director, said they have 10 staff members processing loan applications for the entire state of Virginia. He said simplifying the process means finishing a package in less than 30 minutes rather than nearly 3 hours.
Bulger said some banks might not be ready to process applications by Friday but business owners should start reaching out if they’re interested.
As for when owners can expect to get the money after applying, Bulger said it depends on the bank. He estimated between a week and a couple of days.
Knoblock expects PPP to make a big difference for Virginia’s small businesses.
“I’ve had several people in tears with the potential opportunities available to them when they thought they had no hope,” Knoblock said.