ATLANTA - The federal government’s $350 billion “Payroll Protection Program” is up and running, but not without expected hiccups.
This is what a banker told the Fox 5 I-Team: It’s like taking Niagara Falls and having one week to figure out how to force it through a drinking straw. It’s been slowed by high demand and banking regulations.
However, money is coming for businesses like Smugs Fitness in Atlanta’s Kirkwood neighborhood. Sam Mugarevo’s gym had to quickly change its business model.
“It’s been an interesting few weeks or so. We stopped our live classes in person on the 13th and went virtual on the 16th,” he told us from an empty work-out space.
The Sons of Pitches FC co-owner, Christopher Wedge, was onto something when he created an adult soccer league that played on downtown rooftops.
“We went from having our best season to date to basically zero, zero revenue. We’ve basically laid everyone off including me and my co-founder and business partner.”
America needs to save small businesses to save itself in these quarantine days. April 3rd the feds rolled out a $350 billion lifeline – the Payroll Protection Program – designed by the CARES Act. Georgia Congressman Charlie Loudermilk admits the rollout had hiccups.
“We anticipated some of these problems, but you don’t know all of these problems until you get into the midst of this historic program.”
Banking regulations meant to deter fraud and predatory practices have to be worked out.
“We are going to waive those requirements, are we going to suspend these requirements that are particularly onerous on the small banks who we are relying on to make these loans. Just to get this in the hands of the business,” the 11th district republican told me.
Here’s what you do. Your first contact is your bank. Apply through that institution. It’s about a two-page application. The congressman who serves on the House Financial Services Committee says you should get the money within two days once the Small Business Association finalizes paperwork and procedures. And if you keep employees on payroll, it’s a grant that you don’t have to repay.
“If you make your payroll for the eight weeks period that this loan is for, if you make your payroll, they don’t pay that money back.” Rep. Loudermilk said.
At Smugs Fitness, they still have money coming in. Some clients are still paying because of their online work-out offer. But in a historically great economy, this business owner had just taken a leap to expand.
“That’s the panic right now. We incurred a little debt, invested in some technology, in anticipation of moving into a new space. Security deposit is paid; lease is signed, and we are ready to go. That’s the stuff that keeps you put at might,” Sam Mugarevo said.
This grant money will fuel his next few months.
Wedge, on the other hand, walks by the empty soccer fields, but he’s optimistic he can get touches on the ball again. He is also applying for some of that $350 billion dollar bailout. He says he has turned to mentors – Georgia’s Small Business Association and Start Me Atlanta.
“They have been very helpful. I’ve always gone to them for guidance to look over our numbers and our books, so they’ve always been helpful.”
The COVID-19 safety net sent by the federal government, but to be managed by banks, is expected to have fewer holes in the coming days. And if the money runs out, Rep. Loudermilk says he thinks more is coming.
“The administration says, don’t panic. If this pot of money runs out, they are
going to ask for more money.”
Here’s what congress is working on to make this process run more smoothly. About a third of Georgia banks are not credentialed to make loans through the Small Business Association. They’re trying to fix that fast.
Wells Fargo, a major lender, is capped at how much money it can loan because of a financial scandal two years ago over fake accounts. Regulators are trying to offer a temporary fix.