Small business owners will be able to apply for loans to weather the economic downturn set off by Covid-19 on a first-come, first-serve basis beginning Friday as part of the newly-passed stimulus package.
The Payroll Protection Program aims to provide $349 billion in forgivable loans to small businesses, to help them maintain employee payroll, make rent or interest payments on their mortgages, pay utilities or cover other overhead costs, according to administration officials. Businesses are expected to receive their checks within three weeks of applying, administration officials said.
Borrowers will be charged 0.5% interest as part of the Trump administration’s efforts to offer funding to small businesses so they continue operating during the current slowdown, according to the Treasury Department.
The new legislation also provides a “generous” processing fee that’s paid by the government for facilitating these loans to incentivized banks and other lenders to issue the loans, administration officials said Tuesday.
Administration officials hope that the loans will help small businesses meet payroll and cover overhead, provide incentives for larger businesses to keep employees on the payroll, provide enhanced unemployment insurance for workers who are laid off and protect distressed industries that are critical for the country’s national and economic security.
All loan payments will be deferred for six months and receive a 100% guarantee from the Small Business Administration.