Retailers like Georgie Lou’s Retro Candy Store in Carlisle, Pennsylvania, are likely to receive the same amount of money they did in the spring – which took Georgie Lou a few months, leaving owner Stephanie Patterson Gilbert to turn things around. to compile her own. since.
“It’s useful, but none of this is going to save a business at the end of the day,” Gilbert said.
Her income has dropped by 75% compared to 2019, which is likely to make 2020 her worst year since she first opened more than a decade ago. She keeps her business closed to customers throughout the pandemic and only takes orders online.
“The only thing that will save small businesses is to get past Covid,” Gilbert added.
What happened to the first round
The first round of forgivable loans was paid out between April and August. Lawmakers have designed the Paycheck Protection Program to help small business owners stay afloat, while some states and cities have imposed closure restrictions to stop the spread of the coronavirus.
The program closed in August for new applications, even though coronavirus cases have started to increase again. It expanded after the initial rush for financing turned into an attempt to find borrowers, in part because of the rules surrounding loan forgiveness.
By that time, it was clear that the economy would not return to normal. quickly. Yet Congress allowed aid to lapse despite dual support to reopen it. Small business owners waited another five months before lawmakers passed legislation reopening the program.
Local organizations in communities across the country have been trying to help fill the gap over the past few months by soliciting donations. In Carlisle, a retailer raises money to buy gift cards from city businesses, which in turn are donated to frontline workers or local charities.
What’s in the new version?
Several amendments proposed by Republicans and Democrats, including President-elect Joe Biden, made it to the final bill passed in December, which created a program to target those most in need. Employers with more than 300 workers are excluded from the second round. Legislators also cut $ 12 billion for businesses in minorities. Restaurants and accommodation establishments can now apply for larger loans, equivalent to 3.5 times monthly payrolls.
But for others, the size of the loans will remain the same, based on the 2.5 times the average monthly wage expenditure as before, although it is unlikely that the economy will return to normal by spring.
Since the summer, income for small businesses has continued to decline. According to Opportunity Insights, a project at Harvard University, it is currently 32% lower than a year ago, and the number of small businesses open and operating is declining.
How the money will come out
The loan program was reopened to some lenders on Monday, about three weeks after Congress passed the bill. During the first few days, only community financial institutions, which mostly work with very small businesses, and which are often minority businesses, will be able to make loans.
Other lenders will likely have to wait until next week, in an effort to give mom-and-pop stores an edge they did not get the previous time, when the system was initially overrun by big business.
“It’s not a silver lining for small businesses. But they can hopefully get a bunch of their applications in before the system is overwhelmed,” said Jeannine Jacokes, chief executive of the Community Development Bankers Association.
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