Around two weeks ago, President Trump announced a relief package of $349 billion for US small businesses. This package will be provided by the Payment Protection Program or PPP under the CARES act in the form of forgivable loans. It aims to pay employees during the COVID-19 epidemic.
The loan amounts will be forgiven as long as:
- The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 weeks period after the loan is made; and
- Employee and compensation levels are maintained.
Payroll costs are capped at $100,000 on an annualized basis for each year. However, the return of the loan will be postponed for 6 months.
Small businesses welcomed this decision. They get funds through which they keep their employees on company payrolls. But, they still are awaiting their loans.
Who can get benefit from PPP?
All businesses including nonprofits, veterans organizations, triple business sole, sole proprietorships, self-employed and independent contractors. These organizations must have a maximum of 500 employees or less, according to the PPP information sheet.
But, many employers are facing difficulty processing their application which qualifies the criterion. They are waiting to get the funds assured by the US government.
Approximately 10 million people are going to lose their job because of a pandemic. And, more than half of them are related to small businesses. So there are a number of employers.
The fund is distributed on a first come first serve basis. Therefore, a huge number of firms could not get the benefit. The fund provided by the US government is just finished within two weeks. Yes, in just two weeks. However, Congress also contributed another $250 billion to the relief package.
SBA is unable to accept new applications at this time for the Paycheck Protection Program or the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding.
The exhaustion of funding increases anxiety and tension for those who could not get aid. Although the US government tries to relieve their people, how much time it will take is a question.
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