Business owners have been eagerly anticipating a $349 billion loan program meant to cushion the economic blow of the coronavirus pandemic.
Some will have to wait a little longer.
The Paycheck Protection Program, which officially opened for borrowers Friday morning, provides up to $10 million in forgivable loans to small businesses with 500 or fewer employees.
It is one of the core provisions of the $2 trillion federal economic stimulus signed into law last Friday, known as the CARES Act, which also provided expanded unemployment benefits and direct payments to millions of American households.
The loan program, meant to fund certain business expenses, such as payroll, rent and utilities, opened April 3 for applications from small businesses and sole proprietors.
However, independent contractors and self-employed individuals must wait an additional week to apply. They can submit applications starting April 10, according to Treasury Department guidance released last night.
The delay comes as many states are also delaying applications for unemployment benefits from independent contractors, the self-employed and workers like Lyft and Uber drivers in the so-called gig economy.
The CARES Act expanded unemployment benefits for these and other workers, who are generally ineligible to collect, because of COVID-19.
The small business loan program, which is being implemented by the Small Business Administration, rolled out Friday to the first wave of borrowers amid much confusion and frustration. The loans are offered through SBA lenders and others like federally insured depository institutions.
“It’s been really difficult to figure out what’s going on,” said Margot Schmorak, CEO and co-founder of Hostfully, a software platform that helps property managers oversee vacation rentals.
Schmorak, based in the San Francisco Bay Area, is hoping to get a loan of roughly $100,000 to cover two months of payroll. The company, which has seven U.S.-based employees, has trimmed unnecessary expenses, avoided layoffs and is “doing OK,” she said.
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While the intent of the program is great, the loan application process has given Schmorak a lot of anxiety, she said.
“It’s like this mad rush, and I don’t understand how it’s supposed to work, and what we’re supposed to do,” she said.
Many banks, which only received the application form and some key program guidance from the Treasury Department on Thursday night, were not ready to field applications when the lending program officially opened Friday.
“Most lenders will not be ready until Monday, because they just got the guidance last night,” said Brock Blake, founder and CEO of Lendio, an online marketplace for small business loans.
Many lenders haven’t yet been approved by the SBA to offer the loan, he said.
As of early Friday afternoon, institutions had made more than 2,300 loans worth more than $889 million, said Jovita Carranza, SBA administrator, on Twitter.