America has a storied history of overcoming adversity.
From the days of our founding through two World Wars, continuing into 9/11 and today, the American spirit to persevere is one of our greatest qualities. I know we will ultimately triumph over the coronavirus.
But the fate of many small businesses remains in jeopardy. Small businesses are the backbone of the national economy, employing more than half the U.S. workforce. These small businesses are particularly vulnerable to economic disruption and having to close or reduce services for an indefinite period.
Our government leaders are enacting several initiatives to help small businesses, headlined by the $349 billion Paycheck Protection Program, which distributes loans to small businesses who urgently need money to stay open and retain their workforce.
My small business, intelligence360, is based in Houston and supplies updated information on other companies and government agencies to our clients. Each week, we publish data providing information on companies that are growing, hiring employees, or moving.
Our goal is to give our clients the information they need to achieve their business goals, whether that is making new sales or finding capital.
While compiling our reports, I have noticed a drastic shift in the last few months as companies that were prospering are now on the brink of collapse because of the coronavirus. We have gone from an economy with many opportunities for growth to a marketplace with great uncertainty.
This unexpected reversal of fortunes has made it difficult for owners to meet payroll and other operating expenses. Some pessimistic forecasts project more than 15,000 businesses might close permanently due to the coronavirus, but I believe Washington’s quick efforts are vastly reducing that number.
In many cases, the loans will function as a grant.
According to the Small Business Administration, “The loan will be fully forgiven if the funds are used for payroll costs; interest on mortgages; rent and utilities (due to likely high subscription, at least 75 percent of the forgiven amount must have been used for payroll). No collateral or personal guarantees are required.”
Companies can borrow up to 250 percent of their payroll, or $10 million, whichever is less. This large amount is designed so companies can keep meeting payroll and also cover other operating expenses like rent. Many of the companies I work with are using the PPP to weather this storm.
I am thankful Congress and the president are showing such a strong commitment to Main Street businesses and their workers. These companies are the engine of our economy, and it is heartening to see we haven’t been forgotten in our hour of need.
That is why Congress and the president increased PPP funding once the initial $349 billion was used up. On Friday, President Trump signed a $311 billion extension into law, bringing the total amount to $660 billion.
In this time of crisis, government action won’t solve all of our problems, but efforts like the Paycheck Protection Program are helping businesses survive this crisis and prepare for the economic revival that will happen when the coronavirus is gone.