TAMPA (WFLA) – A new federal program to alleviate the economic catastrophe the coronavirus epidemic is imposing on small businesses started today, and it didn’t go as expected.
Congress passed a $2.2 trillion stimulus package last week that included the Paycheck Protection Program, which authorizes small businesses with fewer than 500 employees to get a loan if they keep employees on their payroll.
A Department of Treasury fact sheet shows the loan can be for up to two months of the businesses’ average monthly payroll costs from the last year, plus an additional 25%, up to a maximum of $10 million. Salary or wage payments are capped at up to $100,000 per employee.
The loan will be forgiven by the federal government if the business meets certain requirements, mainly maintaining full-time employee headcount and not decreasing salaries and
wages by more than 25% for any employee that made less than $100,000.
Small businesses and sole proprietors that qualify can apply here now; independent contractors and self-employed individuals can apply starting on April 10.
Congressman Ross Spano, a Republican and former small business owner who represents parts of Hillsborough and Polk counties, said this loan forgiveness program and a separate disaster loan assistance program that is not forgivable can inject much-needed liquidity into small businesses.
But businesses better act fast.
“Go to your lender first,” Spano said on Friday. “Especially if you have a pre-existing relationship with that bank and particularly if it is a pre-approved SBA lender. Get in line quick though, there will be high demand for these monies.”
Gio Cruz is a co-owner of Ducky’s Sports Lounge on Kennedy Avenue in Tampa. His business partner is former Rays baseball star Evan Longoria, now with the San Francisco Giants.
Like most bars and restaurants, Cruz said the coronavirus outbreak and its subsequent shelter-in-place orders have decimated his business.
“It’s catastrophic,” said Cruz.”I never expected something like this in a million years. We’ve gone down in sales almost 90%.”
He was hoping this program would help his business and his employees, but his bank told him the paperwork from the SBA Is on hold.
Cruz said he’s had to lay off or furlough almost all of his 36 staff members. How that will impact his employees keeps him up at night.
“As a business owner, you’re crushed,” Cruz said, “because you have to think of your home and your family. But you also have to take care of your employees. You close down and the long term effects of that mean both sides are screwed. I’m just praying, hoping today everything gets resolved and we can get that money.
But Cruz said he’s already seeing issues with the new federal program.
Small business loans were supposed to be available today for submission, but his bank called to tell him there have been delays and changes in the proper paperwork, and he’ll need to try again on Monday.
The downturn in business couldn’t have come at a worse time — March is the best month of the year for Ducky’s, with March Madness, the start of the baseball season and the hockey playoffs gearing up.
He also just found out his wife is pregnant with their first child.
“It’s scary man, it truly is,” Cruz said. “But I’m excited. I’ve wanted to be a dad forever.”
LATEST ON THE CORONAVIRUS PANDEMIC:
- Biden clarifies COVID comments: Pandemic ‘basically is not where it was’
- Biden draws heat for saying pandemic is over
- COVID-19 could more than double chance of Alzheimer’s disease in seniors, study says
- Heath experts weigh in on new COVID boosters
- Doctor: ‘Wait 6 months after infection’ before new booster