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U.S. Treasury Claims Small Businesses Will Be Given Same-Day ‘Retention Loans’ To Help Cover Payroll

U.S. Treasury Claims Small Businesses Will Be Given Same-Day ‘Retention Loans’ To Help Cover Payroll

small businesses
The U.S. Treasury claims that small businesses will be given same-day ‘retention loans’ to help cover payroll. The SBA website crashes. This caricature of Steven Mnuchin was adapted from a photo in the public domain from FEMA.

U.S. Treasury claims small businesses will be given same-day ‘retention loans’ to help cover payroll but the SBA site crashed under heavy usage. In reality, loans could take 3 weeks to process.

As part of this week’s $2.2 trillion coronavirus relief bill, $350 billion has been earmarked for job retention at small businesses.

More than 30 million small businesses in the U.S. employ 47.3 percent of the private workforce, according to the U.S. Small Business Administration.

More than half of those 30 million small business owners say their business will be unable to continue operating after three months due to economic strain caused by the coronavirus pandemic, according to a Goldman Sachs survey of more than 1,500 small business owners conducted March 16-17.

Small Business Administration loans will cover about 50 percent of the private payroll, according to Treasury Secretary Steven Mnuchin. The loans will cover eight weeks of employee salaries and will be forgiven as long as businesses keep their workers employed, Fox Business reported.

New regulations will authorize almost every FDIC-insured bank to make the loans directly to businesses. The loans will be backed by the SBA.

Mnuchin said he expects a “very simple process” by the end of next week where the loans can be made and dispersed the same day.”

However, the SBA’s website crashed under heavy usage and many users were unable to complete loan applications, New York Times reported. Those who did were told that they will take at least three weeks to process.

“This is awful and embarrassing. We’ve got a small business bloodbath. SBA is well intentioned but does not have capacity to deliver,” tweeted Ross Baird, founder of Blueprint Local and co-founder of Village Capital.

Delays could mean the difference between surviving and going out of business for small business owners.

The SBA hosted a webinar on Monday to cover the process for applying for an SBA Economic Injury Disaster Loan. Small business loans of up to $2 million will be available to meet financial obligations and operating expenses of qualifying small businesses or non-profits, according to business coach David Pierce with Petra Coach.

Terms include up to 30 years with fixed rates of 3.75 percent for small businesses 2.75 percent for non-profits. The SBA will determine the loan size based on your economic loss from the information submitted on your application, Pierce wrote.

On social media, not everyone was buying the same-day promise.

“Banks & the SBA don’t have the capacity to quickly administer & scale up to a $350B bailout program, during a national quarantine. SBA can’t even get their website to work. Banks will prioritize the largest businesses (up to 500 employees) based on efficiency & profit,” Jamarlin Martin tweeted. Martin is the founder and CEO of Moguldom and host of the GHOGH podcast.

Listen to GHOGH with Jamarlin Martin | Episode 69: Jamarlin Martin Jamarlin goes solo to unpack the question: Was Barack Obama the first political anti-Christ to rise in Black America?

The stimulus package also includes up to $250 billion dollars in expanded unemployment benefits. The average worker who has lost a job will receive 100 percent of their salary for up to four months, the government said. Independent contractors and those who are self-employed are also eligible.

The coronavirus relief package was passed unanimously by the Senate on Wednesday and is expected to be passed by the House of Representatives on Friday.

Learn more about Coronavirus SBA loan resources here.

Review a summary of legislation pertinent to small businesses here.