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Uncertainty surrounds $349 billion Paycheck Protection Program that debuts Friday

Everyone has questions about the rules for the program, created by Congress just last week, including the people responsible for running it.

TAMPA — One day before it was to make its debut, one of the biggest small business relief programs in U.S. history was beset by questions on all sides.

The $349 billion Paycheck Protection Program is scheduled to begin accepting applications on Friday — just a week to the day after it was signed into law. It’s meant to provide forgivable loans to cover eight weeks of payroll and operating costs for companies, nonprofit organizations and other employers with fewer than 500 workers.

But many businesses aren’t sure how it works. Nor are lenders. Nor are many of the people responsible for running it.

Related: Apply Friday for small business Paycheck Protection Program

Consider this: On Thursday afternoon, Valley Bank senior vice president Chris Kneer said he didn’t think the federal government had produced the final, official application form for small businesses to fill out. Valley Bank has a list of 5,000 businesses that have expressed an interest in applying for this aid, and Kneer hoped a final application would be available at the start of business Friday morning.

"Customers are looking at April 3 and saying, ‘Okay, we’re ready to give you our application,’ " said Kneer, Valley Bank’s division manager for U.S. Small Business Administration-funded programs in four states. "And right now we have to say, ‘Well, there’s no final application, so hold tight.’ "

On a conference call with Small Business Administration officials a few days ago, Kneer said, “they said they are building the plane as they fly it.”

During a webinar to explain the new program on Wednesday, Miami-based Small Business Administration representatives said “I don’t know” to question after question after question asked by the 300-plus participants.

“Another really good question,” Jonel Hein, deputy director of the South Florida district office of the Small Business Administration, said at one point. “I appreciate all the nuances that you guys are looking at to make sure that you’re eligible for this program and that you’re eligible for (loan) forgiveness. Again, I don’t know. I hate to keep saying that.”

But, she said, unlike a couple of other more established Small Business Administration programs that have been updated for the coronavirus pandemic, the Paycheck Protection Program is “brand-new,” so a lot of the questions have not been worked through yet.

The application period opens Friday for sole proprietors and small businesses, which are generally defined as having fewer than 500 employees. Independent contractors and self-employed individuals will be able to apply on April 10.

The program aims to provide small businesses with loans that can be forgiven if the companies maintain their headcounts and pay levels, or quickly rehire employees cut after Feb. 15. Loans of up to $10 million per business are available.

Putting $349 billion on the street quickly is especially tough, Florida Bankers Association president and chief executive officer Alex Sanchez suggested, for an agency like the Small Business Administration, which he noted last year made loans totaling $23 billion through its primary program that banks participate in.

“We are obviously very grateful for the leadership of our country, but we’re frustrated that those most needing the help right now may suffer because the rules are still being written,” he said.

For example, he said the $2 trillion stimulus bill, known as the CARES Act, encourages banks that are not certified to participate in Small Business Administration programs to get certified to participate in the Paycheck Protection Program so that more lenders can make money available faster.

“Here we are the day before the program is to kick off, and there’s no guidance at all as to even the form that banks need to fill out to get that certification,” Sanchez said.

In St. Petersburg, certified public accountant W. Gordon “W.G.” Spoor II said the biggest question he gets from clients is, “is this program going to run out of money, and how quickly?”

“The sense of urgency that’s been created has caused, I think, some of the rush here to get this done,” said Spoor, a partner at Spoor Bunch Franz. “Every single person thinks that if they don’t have their application in tomorrow when it opens up they will not get funding. It’s physically impossible for us to help all of our clients and bankers to help all of their clients and everybody to get all of these applications in tomorrow.”

Another common question, he said, is how to consider workers who are independent contractors for purposes of calculating a firm’s average monthly payroll, a metric key to determining a company’s benefits.

“There’s a ton of uncertainty around this,” he said.

Times staff writer Matt Baker contributed to this report.

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