US banks stand to make billions from small business rescue
Published : Thursday, 2 April, 2020 at 4:43 PM Count : 167
As part of the federal response to the coronavirus epidemic, banks that are lending to US small businesses stand to raise $350 billion in debt.
Under the $2tn relief package signed by Donald Trump on Friday, the Small Business Administration will lend cash to companies under that law through banks and credit unions.
The entire loan will be forgiven if it is used for payroll, mortgage interest, rent or utilities within two months after receiving the money. Employees will be less forgiving if they are dismissed or paid.
Any amnesty that is not forgiven will accrue at a rate of 0.5%, and the principal will come in two years, the SBA said Tuesday, as it shared details of its "payroll check protection" program.
Banks will accept processing fees paid by the federal government for making loans. The fee will vary with the size of the loan: 5 percent for loans under $ 350,000, 3 percent for loans under $ 2 million, and 1 percent for loans under $ 2 million. Loans do not carry capital charges.
Borrowers will have to fill out a two-page form and documents of their business in mid-February. End creditors do not have to wait for SBA confirmation before the cash is available on Friday as well. Businesses will be eligible to receive up to 2.5 times the average monthly salary with their $ 10-month cap eligible.
"Speed is the operative word," said Jovita Carranza, SBA Administrator. "While applications for emergency capital can begin earlier this week, nd donors use their own systems and processes to create these make-up."
According to the SBA, there are 3 million business organizations in the United States with less than 5 employees, employing around 1 million people, almost half of the private workforce. Advocacy group National Federation of Independent Business says about three-fourths of its members are in crisis.
After the president signed a rescue package, the SBA was under pressure to release details of the program. After customers disappear all but the short list of required businesses, traders were unsure about an important question: whether to put their employees on payroll, or whether they would be left to collect beefed-up unemployment insurance checks.-Internet