What is the Small Business Protection Plan? How will it protect small businesses?

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As a small business owner, you have a lot on your mind. You can’t afford to lose time or money but still small business are struggling must especially time like this. Those were the companies meant to be helped by the Paycheck Protection Program, which offers loans to small businesses clobbered by the shutdown of the economy.

The program has helped many such companies. But the law’s fine print didn’t close all loopholes. Large companies, we now know, got loans. And, now it appears that companies didn’t have to be struggling to win a loan, either.

Over the last few weeks, most restaurants and brick-and-mortar stores have been doing a fraction of their normal business and, in many cases, no business at all. 

For nearly half of small businesses, those lost weeks could be enough to push them into the red. Enough to make it impossible to pay rent, which for many is due today for the first time since the start of the COVID-19 outbreak in the world.

Even some big businesses say they can’t afford rent. I know of a factory sent a letter to its landlords in mid-March informing them it would not be paying rent because the virus “inflicted a tremendous financial blow to our business.”

That will likely be harder for small business owners to do.

“Small businesses clearly don’t have the leverage that those big chains do,” said Jared Nicholson, director of the Community Business Clinic at Northeastern University School of Law. “While the landlord is going to be willing to cut a deal with a huge customer, the tiny small businesses may not be able to get that kind of break.”

If you’re a small business owner who may not be able to afford rent this month or next, what can you do?

“Take a look through your lease and see if there’s anything in there having to do with suspending rent obligations during an emergency, during a crisis, or during a time when the government forces your business to shut down,” 

Similarly, most insurance policies do not offer much protection under current circumstances.

Call your landlord

If you’ve gone through your lease and found you’re still on the hook for rent, the next step is to try to negotiate with your landlord.

“Call your landlord, say, ‘For obvious reasons, I’m going through difficult times. I see a path where I can continue this lease, or I can continue this mortgage and support my business, and we can be long-term partners, but I do not have the cash to pay,’” said Michael Roth, a managing partner at the advisory firm Next Street.

Apply to the new Paycheck Protection Program

small businesses will be able to apply for an emergency loan — much of which can be forgiven — using the new Paycheck Protection Program. 

The program, run by the Small Business Administration and the Treasury Department, came out of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Small businesses and nonprofits with fewer than 500 employees can apply for a loan of up to $10 million. Any portion of the loan that goes toward payroll costs, rent, mortgage interest or utilities in the first eight weeks will be forgiven — as long as at least 75% was used for payroll.

This is a “phenomenal, phenomenal product and program that small businesses will be able to have access to. But not everyone will be able to access the funds they need, at least not right away. 

The problem is that the program wasn’t designed to help companies grow. It was meant to rescue small companies, nonprofits and self-employed people struggling to make payroll or pay benefits and utilities. Companies or organizations that otherwise would have to lay people off. And because the loan money will run out — all $660 billion of it once the two rounds of the PPP program are done — every dollar that goes to a company that is thriving in the current crisis doesn’t go to one of the small, struggling companies meant to be helped. “The goal here isn’t to expand the size of the companies,” “The goal here is to kind of keep them alive while we get through this crisis.”

Look for local funding sources

At city and state level, there are other sources of funding for small businesses. Philadelphia created a $60 million fund to offer loans to small businesses. Chicago just launched a $100 million fund. Other cities and states are making resources available, too. 

“Unfortunately, there isn’t a one-stop shop where you can find this right now. “But Google is your best friend. So are the small businesses on the block with you who you’ve worked with before. Ask them where they’re getting funding from. Find your local resources.”

And as with the Paycheck Protection Program, he added, act quickly: “The demand… has been out of control.”