A framing art gallery is closed in Venice Beach, California’ during the COVID-19 novel coronavirus.
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Some small-business owners are growing increasingly worried that loan money being distributed as part of the coronavirus relief package will run out before they can access funds.
The Paycheck Protection Program, which is being overseen by the Small Business Administration, will pay out up to $349 billion in forgivable loans to businesses with 500 or fewer employees.
It is one of the core provisions of the $2 trillion economic stimulus package President Trump signed into law March 27. Businesses can qualify to have eight weeks of their loan forgiven if funds are used for certain business expenses, such as payroll and rent.
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Demand for the loans, facilitated through local banks, has surged.
The Small Business Administration approved 130,000 loans worth $38 billion as of 9:30 a.m. on Monday, according to Larry Kudlow, director of the National Economic Council. That represents nearly 10% of the total pot.
Business owners like Doug Trovinger are afraid there won’t be any money left by the time his application is processed.
“There’s a lot of anxiety within the business world,” said Trovinger, who owns Document Doctors, LLC, a one-person shop based in Hendersonville, Tennessee.
The 40-year-old is seeking a $10,000 loan to help cover salary and rent for his business, which specializes in document management and content creation like training and learning development.
He filled out an application and passed it along to the community bank where he has an account. But the Small Business Administration hasn’t yet processed the loan, Trovinger said.
I feel it’s going to run out very quickly.
founder of Document Doctors, LLC
“I’ve basically been putting my foot on the gas with my bank. They’re a smaller bank, and my concern is the bigger banks will get all the money,” Trovinger said. “I feel it’s going to run out very quickly.”
Nerves seem especially high for independent contractors and freelancers.
While many small-business owners and sole proprietors have been able to submit loan applications as of April 3, independent contractors and self-employed individuals must wait until April 10.
‘Limited amount of funds’
Erica Orthmann, a freelance marketing consultant based in Boston, feels she could fit into both the April 3 and 10 camps, but her bank hasn’t been able to provide additional guidance.
“I don’t think my bank really knows where to place me, in terms of trying to give me access to one of these applications,” said Orthmann, 36.
Orthmann, the owner of Erica Orthmann, LLC, which works primarily with local technology companies, is seeking a roughly $20,000 loan to help prop up her business.
She is currently the lone breadwinner in her household since her husband, a chef, recently lost his job due to the economic fallout from the coronavirus. Orthmann is also just returning from a three-month unpaid maternity leave to care for her newborn child.
Orthmann has been trying to apply for a Paycheck Protection Program loan since Friday. However, there have been delays with her community bank — she doesn’t have a business account because she runs invoices through a personal bank account with the institution.
The bank doesn’t know how to proceed with personal-account customers and notified Orthmann it would have to follow up regarding her application, she said.
“I feel like a lot of freelancers may be in my position,” Orthmann said.
“There’s a limited amount of funds to go around and a limited amount of time to apply for these loans,” she said. “You want to jump on it as fast as you can, but the guidance is so unclear you can’t move forward.”