Small-Business Owners Run Into Huge 'Bottleneck'

Millions of small businesses are barely staying afloat amid the coronavirus pandemic, and the feds are offering help—but getting that help is another thing, the New York Times reports. Two federal efforts, the Paycheck Protection Program and the Economic Injury Disaster Loan program, are both low on funds and swamped with requests. The Paycheck program is embroiled in a partisan political battle on Capitol Hill over how to add another $250 billion, per the Washington Post, while applicants to both programs are fighting red tape or waiting for their funds. It's a huge topic, but here's a primer and a few tips for applicants:

• The Paycheck Protection Program has $349 billion to incentivize banks to grant small-business loans. The loans need to be repaid at an interest rate of 1% over two years unless certain metrics are met for retaining employees—at which point a loan is forgiven by the feds, per the Times.
• The Economic Injury Disaster Loan Program is designed to offer loans up to $2 million, but recent applicants say the cap is now $15,000 as requests flood the program. According to a fact sheet, the interest rate is 3.75% for small businesses without available credit elsewhere, and 2.75% for non-profits.
• The Times advises Paycheck applicants to apply in off hours and remember two things: It might be better for companies with workers who are higher-paid or can work at home; and worse for businesses that don't know when they can re-open, like restaurants and bars.
• Forbes gives hard-hitting advice "to avoid going to prison" over a Paycheck program loan. Stung by fraud related to Katrina, TARP, and other programs, the feds will prosecute scammers.
• At BizJournals, expert James Lozano suggests asking a bank or credit union for advice before proceeding with either program—and says "larger small businesses" might want to apply to both.
• "My biggest advice is take away the fear," Tennessee realtor Matt Golley tells WAAY TV. "Let someone else walk you through the process and tell you what you need and make sure it's submitted correctly. I don't know how to submit documents like that to the government and the bank took care of that for me." Golley says he's been approved with the Paycheck program but hasn't seen the money.
• Whatever path is taken, expect frustrating delays. "Essentially, there's a massive bottleneck in trying to get this money, incredible demand and not the ability to get it out," says a reporter on PBS Newshour.

(More government loans stories.)