This editorial is addressed to any small business that is worried about taking a serious hit from the coronavirus shutdown of the economy — that is to say, it’s addressed to every small business.
As part of the $2 trillion stimulus program enacted on March 27, Congress and the Trump administration agreed to a sweeping Small Business Administration loan program that throws a desperately needed lifeline to the nation’s small businesses at a time when they are at serious risk of simply going under and putting their employees out of work. For that reason, every small business in the region should give serious consideration to applying under the program, and soon.
It’s called the Paycheck Protection Program, and even though structured as a loan program, it’s in fact an innovative approach to helping small businesses stay afloat while keeping their workers on the payroll. It’s open to businesses with not more than 500 employees, and eligible businesses include nonprofit and veteran organizations, tribal business concerns, sole proprietorships, self-employed individuals and independent contractors. If approved, a business can borrow, with certain limitations, 2½ times its average monthly payroll costs (which can include certain employee benefit and other related costs as well), up to $10 million. The loan, which would come from an SBA-approved bank, would be for two years and bear interest at only 1 percent annually.
The greatest attraction for a small-business borrower, though, is that the loan will be forgivable — in full — if it is used mostly for payroll costs and, to a lesser extent, non-payroll costs for mortgage interest, rent or utilities. For the loan to be forgiven, the business must show that, for the eight weeks after getting the loan, it maintained staffing and payroll at levels comparable to a period before the coronavirus crisis, as spelled out by the SBA.
The beauty of the PPP program is that small businesses can get an infusion of cash at a time when so many have so suddenly had their economic legs kicked out from under them. At the same time, they can retain their workers and keep them off unemployment until, the hope is, the crisis abates and businesses can begin returning to normal operations.
The SBA’s rollout of the PPP program has been a bit rocky — though that is understandable given it was but a week from the president’s signature on the stimulus bill to the launch of the program last Friday. Encouragingly, though, Kristy Merrill, president of the N.H. Bankers Association, said in a press release Monday that all its member banks are participating in the program and are already “actively lending much needed funds.”
But small businesses shouldn’t waste time. The PPP program is first-come, first-served. Also, the amount of loans under the program is capped nationally at $349 billion, and the countrywide shutdown of the economy means the small-business need is great. More details about the program and the loan application form can be found on the SBA’s website (www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp#section-header-4), and the Bankers Association has posted a list of participating New Hampshire banks, including all the area banks, at www.nhbankers.com.
Small businesses are often described as the economic cornerstone of the Granite State’s economy. The PPP is a welcome program that can give them a fighting chance to remain so.