Coronavirus deal would give small businesses a shot at a second PPP loan
The CARES Act designated up to $10,000 of each EIDL loan as an advance that lawmakers said should not be repaid. But the law required the advance to be tied to the amount that would be forgiven on a business’ PPP loan, according to the Small Business Administration.
Angelina Branca owns Saté Kampar in Philadelphia, an acclaimed restaurant that closed its storefront in May and subsisted on pop-up events. Ms. Branca used a $32,000 Paycheck Protection Program loan to pay her event workers, but when she recently filed for loan forgiveness, she was horrified to learn that she should repay the $10,000 she received from the Economic Disaster Loan. program. Ms. Branca contacted her lender and her representatives in Congress to complain.
“That monthly payment wasn’t something I had anticipated, and that’s $500 a month that I can’t afford,” she said. She made payments on the debt; these payments should be refunded, according to invoice summaries.
The bill includes other relief measures that aren’t specifically part of the Paycheck Protection Program but could help many small businesses nonetheless. These include a $15 billion grant fund for closed theatres, museums, zoos and live event venues, and $12 billion for community development financial institutions, which provide loans and subsidies to people and communities who are often unable to do business with traditional banks. .
That amount of money would be transformational, said Jeannine Jacokes, chief executive of the Community Development Bankers Association, a trade group for community financial institutions.
“Whenever we have a recession, low-income places are hit the hardest and are the last to recover,” Ms Jacokes said. “The Treasury provides the capital for long-term investment in these communities.”
While lenders anticipate strong demand for new loans, some borrowers remain wary. Caren Griffin is still sitting on the $66,000 loan she got in May to University Spa, a spa hotel she owns in Denver. Her spa hasn’t been able to reopen and she fears she’s breaking rules so complicated that her bank and the six accountants she spoke to are still struggling to interpret them.