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Retail businesses like Georgie Lou’s Retro Candy store in Carlisle, Pa. Will likely receive the same amount of money they received in the spring – which only lasted a few months for Georgie Lou, leaving owner Stephanie Patterson Gilbert to piece things together for herself. since.
“It’s helpful, but none of it will save a business at the end of the day,” Gilbert said.
Its revenue is down 75% from 2019, possibly making 2020 its worst year since opening more than a decade ago. She has kept her business closed to walk-in customers throughout the pandemic and only takes orders online.
“The only thing that will save small businesses is to overtake Covid,” Gilbert added.
What happened in the first round
The first round of forgivable loans was disbursed between April and August. Lawmakers designed the Paycheck Protection Program to help small business owners stay afloat while some states and cities have imposed shutdown restrictions to help stop the spread of the coronavirus.
The program closed to new apps in August, even as cases of the coronavirus began to reappear. It had been extended after the first scramble for funding turned into an effort to find takers, in part because of the rules around canceling loans.
It was clear at that time that the economy was not going to return to normal quickly. Yet Congress allowed aid to stop functioning despite bipartisan 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 tried to help close the gap in recent months by soliciting donations. In Carlisle, a group of merchants raise funds to purchase gift cards from businesses in the borough, which in turn are given to frontline workers or local charities.
What is in the new version?
Several changes proposed by Republicans and Democrats, including President-elect Joe Biden, made this the final bill passed in December, creating a program that targets business owners most in need. Employers with more than 300 workers are excluded from the second round. Lawmakers also cleared $ 12 billion for minority-owned businesses. Catering and accommodation businesses can now apply for larger loans, equivalent to 3.5 times the monthly payroll.
But for others, loan amounts will remain the same, based on 2.5 times the average monthly salary expenditure as before, although the economy is unlikely to return to normal in the spring.
Since the summer, small business incomes have continued to decline. It is currently down 32% from a year ago, and the number of open and operating small businesses is down nearly 30%, according to Opportunity Insights, a Harvard University project that follows recovery.
How the money will come out
The loan program reopened to some lenders on Monday, about three weeks after Congress passed the bill. In the early days, only community financial institutions, which mainly work with very small businesses often owned by minorities, will be able to provide loans.
Other lenders will likely have to wait until next week, in an attempt to give mom and dad stores a boost they didn’t get last time around, when the system was overrun by big business early on.
“This is not a silver bullet for small businesses. But they will hopefully be able to receive many of their applications before the system is overwhelmed,” said Jeannine Jacokes, CEO of the Community Development Bankers Association. .
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