Federal program offers financial relief for small businesses impacted by COVID-19

WICHITA, Kan. (KWCH) EDITOR'S NOTE: The SBA Lenders Guide has Central Bank and Trust listed as the lender for Hutchinson. RCB Bank acquired Central Bank and Trust in 2018.

Photo courtesy: MGN

Update Tuesday, April 7, 2020

Congress is prepared to give more funding to support a new program geared toward helping small businesses weather the COVID-19 pandemic. President Trump on Tuesday held a conference call with banking executives as some small businesses worry the relief program, the Paycheck Protection Program, will run out of funds.

The treasury secretary has asked for an additional $250 billion. Senate Majority Leader Mitch McConnell has said he wants to see the senate approve more money in the program by Thursday.

So far, Vice President Mike Pence says $71 billion has been distributed. That accounts for nearly 20 percent of the money available in the Paycheck Protection Program.

Click here to find a nearby lender eligible to issue loans under the Paycheck Protection Program.

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Update Friday, April 3, 2020

The federal government Friday (April 3) launched its lifeline for small businesses impacted by the COVID-19 pandemic, offering $350 billion in forgivable loans for expenses to keep workers employed, including healthcare benefits and payroll.

Rolling out help with the Paycheck Protection Plan is a balance between speed and perfection, says Tom Sullivan, Vice president of Small Business Policy with the U.S. Chamber of Commerce.

"We know speed is what it's going to take to make sure these small businesses survive," Sullivan says.

The assistance comes at an important time. The U.S. Chamber of Commerce says a new poll shows nearly one quarter of small businesses in the country say they can only survive another two months before they permanently close. Some of the nation's biggest banks, including Chase, still have questions about the program and say they are not yet accepting applications.

It's a problem Eyewitness News has heard about locally, as well. We spoke with a small business owner who says he reached out to several banks in Wichita concerning the Payment Protection Program only to hear they were putting a pause on this.

"It was rolled out (Friday) in record time, and there were some hiccups," U.S. Rep. Roger Marshall (R-Kan.) says. "Small businesses use their banks for these loans, and not surprisingly, there were challenges."

Marshall says he spoke with the the secretary of the U.S. Treasury Friday and says the department is working on the challenges lenders and businesses are facing in the new program. They say problems will be fixed.

Marshall says a request for more money to help small businesses could happen if and when the $350 billion available in the program runs out.

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Thursday, April 2, 2020

The time is now for small business owners to take advantage of stimulus money the federal government recently made available.

The Paycheck Protection Program. provides forgivable Small Business Administration loans up to $10 million for small businesses to cover eight weeks of payroll, group healthcare benefits, lease payments and mortgage interest, U.S. Senator Pat Roberts (R-Kan.) explains.

“The Paycheck Protection Program delivers much needed relief to Kansas small businesses by providing forgivable loans for businesses that keep employees on their payroll,” Sen. Roberts says. “I encourage small businesses in need to contact their bank or credit union to apply to this program.”

Small businesses and sole proprietorships can apply for a loan through the Paycheck Protection Program starting Friday (April 3). Independent contractors and self-employed individuals can apply next Friday (April 10).

Small businesses and “other eligible entities” can apply for a loan if they’re taking a hit due to COVID-19 between Feb. 15 and June 30. Additionally, cash-flow assistance available through the Coronavirus Aid, Relief and Economic Security (CARES) Act helps small businesses stay afloat and helps keep workers from losing their livelihoods, Roberts says.

In the Paycheck Protection Program, loan applications and supporting documentation must be submitted to an approved lender by June 30.
“Due to the expected high demand in loans and limited funds, Kansas small businesses are encouraged to apply early,” Roberts says.

Rep. Ron Estes (R-Kan.) touched on the circumstances surrounding the sudden economic shift brought on by COVID-19 and efforts to keep businesses afloat as efforts continue to slow the spread of the virus.

“…We went from having a booming economy with very little unemployment and switching gears to having this huge, massive increase in people unemployed,” he says. “I would encourage folks to start the process and get through that as quickly as possible so that they can get through the process and get signed up.”

Those eligible to receive a loan in the Paycheck Protection Program include small businesses that employ 500 people or less, tribal businesses, 501© (19) veterans organizations, 501© (3) nonprofits, including religious organizations, independently-owned franchises with less than 500 employees and approved by the SBA. You can find eligible franchises listed on the SBA Franchise directory.

Loans offered through the Paycheck Protection Program are available for up to two months of a small business’s average monthly payroll costs from the last year, plus an additional 25 percent up to a maximum of $10 million, Roberts explains. Payroll costs are capped at $100,000 annually for each employee.

The amount of the loan forgiven is equal to the amount spent on payroll, lease payments, mortgage interest, or utility bills over eight weeks. The loan forgiveness can be reduced if a small business owner decreases their full-time employee headcount, decreases salaries or wages by more than 25 percent for any employee that made less than $100,000 annually or rehires full-time employees by June 30 for changes made between Feb. 15 and April 26.

Small business owners can apply for the Paycheck Protection Program at any lending institution approved by the SBA to participate in the program. You can find a list of available lenders from the SBA Kansas District Office here (from pages 29-31). The list will be updated.

Click here for the sample form which explains the information you need to have prepared for your lender.