Small Business Administration’s New Boss Has Big Job Ahead - The Wall Street Journal

Small Business Administration’s New Boss Has Big Job Ahead - The Wall Street Journal


Small Business Administration’s New Boss Has Big Job Ahead - The Wall Street Journal

Posted: 28 Mar 2020 07:35 AM PDT

WASHINGTON—Jovita Carranza, the newly appointed head of the Small Business Administration, just found herself leading the charge in one front in the epic battle against the coronavirus pandemic.

With the pandemic threatening to engulf many of the country's 30 million small businesses, the 70-year-old Ms. Carranza is now the Trump administration's point person on shoring up a sector of the economy that accounts for 44% of gross domestic product, by the agency's estimates.

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How do you apply for small business funds from stimulus package? - AL.com

Posted: 28 Mar 2020 05:06 AM PDT

Small businesses around the country got a $370 billion lifeline in the $2 trillion Coronavirus Aid bill approved Friday by the U.S. House of Representatives. The largest stimulus in U.S. history, the bill includes relief for taxpayers and large corporations as well as small businesses.

But those businesses want to know - what kind of relief will it provide?

Dave Ketchen is the Harbert Eminent Scholar and Professor of Management at Auburn University, and he has been looking over the legislation. He said time is perhaps the biggest factor in question.

"I definitely think it's a much needed life preserver," he said. "A big question is on the implementation side. If you throw a life preserver to somebody and they drown before they get it, it didn't do them any good. A big question is how quickly is this money going to get into small business people's hands."

In short, he said the package employs a three-pronged approach.

The first part offers emergency grants of up to $10,000 from a $10 billion fund.

"That's a nice little temporary lifeline," Ketchen said. "You can think about making your payroll, which should help." This money will also provide a jolt to the economy, as companies provide the money to employees, who will in turn go out and spend it on food and necessities, boosting an economy brought to its knees by the pandemic's sheltering requirements, he said.

The second part is relief for existing SBA loan holders from a fund of $17 billion, which is meant to cover six months of payments.

The bulk of the package is $350 billion in new forgivable loans, with loans available of up to $10 million per business, based on how much the company paid its employees between Jan. 1 and Feb. 29. The loans will carry an interest rate up to 4 percent.

According to MarketWatch, the Small Business Administration will oversee the Paycheck Protection Program to distribute the money that can be partially forgiven if the companies meet certain requirements. The loans will be available to companies with 500 or fewer employees.

The package allows banks to lend directly to businesses with loans backed by the SBA.

Here is the full text of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The SBA has a website devoted solely to Coronavirus measures. Here's where you can apply.

If the business uses the loan funds for the approved purposes and maintains the average size of its full-time workforce based on when it received the loan, the company will only need to pay back the interest accrued.

According to The New York Times, businesses would not have to repay portions that were spent on paying employees, a mortgage, rent or utilities. Approval is expected to take about two weeks. Business owners also won't have to provide personal guarantees or use all their available assets as collateral.

Businesses that have recently laid off workers would be required to repay a larger portion of their loans, and loans covering salaries of more than $100,000 a year would not qualify for forgiveness.

Ketchen said the effectiveness of the package will be evident based on how long coronavirus measures are needed.

"If economic activity has picked up by the end of May, I imagine this program will have saved thousands upon thousands of small businesses," he said. "If this stretches into the second half of the year, probably no amount of money is going to save those folks."

Ketchen also provided a few answers for small businesses on Auburn's COVID-19 resources page.

Small Businesses Struggle With SBA Disaster Loan Applications - The Wall Street Journal

Posted: 28 Mar 2020 06:00 AM PDT

The Small Business Administration's disaster loan program for small businesses has gotten off to a rocky start, with businesses hit by the coronavirus pandemic complaining about an inability to file their loan applications online.

Small-business owners and advocates, including Jen Earle, chief executive of the National Association of Women Business Owners, said loan seekers either couldn't gain access to the online application site or were bounced off before they could complete their application.

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