Arkansas Businesses Should Prepare Now to Apply for Federal Aid
Businesses can begin preparing now to apply for assistance under the federal rescue package signed last week by President Trump, but it will be about two weeks before they can turn in their paperwork, Arkansas bankers and government officials said.
the $2.2 trillion Coronavirus Aid, Relief & Economic Security (CARES) Act on Friday. The unprecedented aid package offers relief to individuals and businesses rocked by the COVID-19 pandemic.
That includes loans, grants and tax breaks to big and small businesses. It will also send billions to the nation's health care system, along with states and local governments. Arkansas’ share
amounts to $1.25 billion
But it will take about 15 days for the U.S. Small Business Administration to develop guidance for administering some elements of the package. That includes a forgivable loan program called Paycheck Protection, which would encourage businesses with fewer than 500 employees to retain workers and maintain wages. Businesses will apply for the loans through their banks.
Businesses can borrow up to 2.5 times their average monthly payroll cost, Glasgow said. The forgiveness amount is based on the amount of payroll, health care benefits, salaries, rent, utilities and mortgage interest spent in the eight weeks after the loan is received, he said.
There’s a grace period to bring people back and restore their pay for businesses that have already furloughed or laid off employees, he said. Under that period, businesses will have until June 30 to rehire employees or restore their pay and not have either count against their loan forgiveness.
In all, White said it could be two months before businesses see Paycheck Protection Program money to cover payroll, rent and other expenses.
Glasgow, Haddock and White all said businesses
should start collecting the detailed financials they’ll need for the application process.
Businesses should also know what their run rate — or burn rate — is during the pandemic and understand what their overhead is, Haddock said. He also suggests
signing up for emailed updates from the SBA
Glasgow said businesses need to be thinking about their record-keeping practices as well, because they will have to show how they spent the Paycheck Protection Program loan money.
“They're going to have to be able to go back to the bank later and show them that they spent the money on the expenses that are eligible for the forgiveness,” he said.