Congress gave final approval to a new $484 billion COVID-19 stimulus package on April 23 and President Trump signed the measure a day later.
The bill includes an additional $321 billion for the
Paycheck Protection Program, a lending program designed to help small businesses with forgivable loans during the crisis. The new influx of federal dollars provides a new opportunity for small businesses that were shut out after the initial round of funding ran dry within two weeks of opening.
Tim Jeffcoat is Houston district director for the SBA. Here's his advice for businesses applying for these federal dollars.
Anyone who is interested in a PPP loan today should stop what they're doing, get with the banker of their choice, and get an application out. Jeffcoat said Houston has around 150 lenders the SBA regularly works with for SBA-guaranteed loans to businesses. In a typical year, it’s a little over $1 billion the agency guarantees here in the Houston area. That number of lenders doing these loans locally has increased to 400.
Don't have a lender? Do some quick research to better your chances of securing a loan. Jeffcoat advises to use this SBA list to find local lenders to work with. On the list, there's a column that indicates whether the lender is accepting new customers. Jeffcoat suggests getting on the phone with these lenders and ask whether you're one of the first few hundred or first of five hundred applicants on the list.
“You’re not really losing anything by taking this kind of approach because the amount of time that goes into a PPP application is quite little," said Jeffcoat. "It’s a very simple application. Things that you should know about your business already – what’s your EIN, what’s your social security number, where are you, who owns your business. You know all that. The only thing you have to do that’s difficult is take last year’s wages, determine your average monthly salary, your average monthly headcount, and then multiply that by 2.5."
PPP is not the cure-all for your small business. "PPP is not the panacea," said Jeffcoat. He notes that the PPP is only good for eight weeks.
Jeffcoat recommends pursuing the
Economic Injury Disaster Loan (EIDL) as well. "The EIDL is a potentially much more versatile and flexible set of funding to help your business," said Jeffcoat. "I think businesses need to absolutely look at that as another source of funding."
"PPP is only paychecks. It covers some rent, some mortgage interest and utilities, but that’s practically nothing in the grand scheme of things for most businesses. If you’re a manufacturer, all that does is let you bring people in. It doesn’t let you buy supplies or ship materials or any of that. So an EIDL is much more versatile and can potentially fund you for a longer period of time," said Jeffcoat.
Read additional advice from SCORE Houston.
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