The $349 billion rescue program for U.S. small businesses, already overburdened by demand and delays, is about to get a new flood of potentially tens of thousands of applications.
The self-employed and independent contractors can start applying April 10 for loans under the government plan for small businesses battered by the coronavirus outbreak. They’ll join a program that started a week ago for firms with fewer than 500 workers, and
Without more guidelines from the Small Business Administration, the agency in charge of the program, and the U.S. Treasury Department, there’s confusion about how the rules apply to the self-employed and independent contractors, said Holly Wade, director of research and policy analysis for the National Federation of Independent Business.
“There is huge need for financial support for those two groups, and we know that the initial rollout was less than ideal,” said Wade, adding that there could be “more frustration and more disappointed small-business owners trying access these lending programs” ahead. The NFIB is the largest association representing U.S. small businesses.
Wade said she is especially concerned about so-called nonemployers' ability to apply if they don’t have an existing lending relationship with an SBA approved lender. Over the past week, borrowers said they were turned away by banks when they didn’t already have a lending account. Banks have been wary about hastily approving loans for new customers, and
April 10 is Good Friday ahead of Easter Sunday. But it’s not a bank holiday, and people have been working around the clock on the program since it launched, said Julie Huston, chief executive of Immito LLC, a lender based in Denver, and chairwoman of the National Association of Government Guaranteed Lenders.
Of the more than 30 million small businesses in the U.S., about 25 million had no employees, including independent contractors and the self-employed, according to the SBA. Many smaller firms have already been forced to close amid stay-at-home orders, and the
The program is a key part of a $2 trillion federal government rescue plan to shore up the economy, and the urgency to get funding flowing was highlighted in the latest jobless claims figures released by the Labor Department figures Thursday: About
The small-business program has been overrun, with more than 497,000 applications processed totaling over $127 billion from about 3,900 lending institutions as of 2 p.m. New York time on Thursday, according to the SBA. That amount hasn’t been given to firms yet, but rather is the value of loans registered for lenders to complete the process and disburse funds.
Treasury Secretary Steven Mnuchin has requested
While the program was created in a matter of days and is complicated, the self-employed and independent contractors with only a couple weeks of cash on hand can’t afford long delays in getting desperately needed funding, said Katie Vlietstra, vice president for government relations and public affairs for the
“We’re trying to be flexible, but we can’t actually have a botched rollout,” Vlietstra said.
A week ago, the Trump administration released guidance to lenders just hours before the program started, leading some banks, including JPMorgan Chase, to
“Hopefully, detailed guidance and paperwork is available,” Merski said. “Otherwise, it’s going to be as challenging as the original rollout or even worse.”
