A New Program by The Federal Government
The U.S Federal Government signed an act in order to provide a massive relief bill to support the small businesses in the COVID-19 crisis. It is a new program by the Federal Government to help small businesses in this pandemic corona-virus outbreak. This program is also called a Paycheck Protection Program. Currently there is a shortage of money, this leads to a shortage of industrial development. SBA works on the capital loan, for this, no fees are charged and the interest is very low. Applications for this can be received by business entities before April 3 rd 2020. While the Independent contractors and Sole Proprietors can submit their filled applications before 10th April 2020.
The funds have been till now completely been used up. In a short period i.e, in two weeks $349 billion has been claimed by nearly 1.6 million small business owners. It is just 1.6 % of US small business units. Thus remaining 94 % of small business owners applications exist, their application status is pending for approval.
Paycheck Protection Program
To avail of this paycheck protection program first know the loan amount that will be sanctioned, it is purely based on the payroll receiving. Up to $10 million or 2.5 X average monthly payroll cost monthly in the past 12 months.
The uses of this loan are for payroll basis, rent mortgage, and utility purposes. The loan period will be around 8 weeks but payment is deferred for six to twelve months. This loan can be applied through an SBA approved lender and up to 100 percent of the loan amount is the forgiveness, at last for this loan applying no personal guarantee is needed.
In the nation overall within this two weeks period people have learned a lot, there is everything in this, good, bad, and ugly of paycheck protection programs. The good in this program is almost $350 billion programs are meant to render the US small businesses with cash for eight weeks period of time; this is a Cen percent federal government-guaranteed loan that is the positive side of this program.
The bad of it is small businesses cannot survive without huge funds; it must be released on time. Most borrowers are waiting ahead for the loan which needs to be funded, thereby the money to get credited in all their accounts. The scar was before the money reached the people were suffering a lot and didn’t know exactly what the situation was.
The Main Motto Paycheck Protection Program
The main motto of this program was to help the business with 500 or fewer employees. But the situation is if the borrowers did not lay off their workers in the next 8 week period, then automatically their loans will be forgiven, both the principal amount and interest. Thus the need for huge loans arises, but I don’t know how everyone will get used to it. Since millions of business owners have applied and now total confusion arises how this gets resolved.
Effects of Paycheck Protection Program
Many economists and small business owners say that Paycheck protection program loans are really bad and it won’t fit the current situation here, because of this pandemic corona-virus outbreak all businesses are closed, thus they are getting affected economically. But then SBA announced that this PPP was stopped now. Thus it is entirely frustrating the public.
