The $2 trillion stimulus package passed late Wednesday promises to deliver some help to small businesses devastated by Covid-19.
For small business, one of the more important sections of H.R. 748 is the Paycheck Protection Program. This program gives the SBA the ability to guarantee $350 billion in loans to small businesses via a network of more than 800 banks. The Paycheck program provides eight weeks of cash-flow assistance to small businesses with 500 employees or fewer.
The low-interest loans are meant to cover payroll costs, paid sick leave, supply-chain disruptions, employee salaries, health-insurance premiums, and mortgage payments. The maximum loan amount is $10 million while the interest rate on the loans can’t surpass 4%.
If the employers maintain their payrolls until June, the portion of the loans usedfor payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven.
Self-employed individuals, or those part of the “gig economy,” can access Paycheck loans, as can certain nonprofits, including 501(c)(3) organizations and 501(c)(19) veteran organizations.
The SBA would administer the program once its passed and signed into law.