Salem’s downtown during the lunch hour on Thursday, March 19. (Saphara Harrell/Salem Reporter)
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Much-anticipated money from the $2 trillion federal stimulus package could provide a substantive lifeline to Salem businesses as soon as Friday — if things go according to plan.
The package, passed by Congress in response to the coronavirus outbreak, makes $349 billion in forgivable loans available to small businesses, sole proprietorships and nonprofits to stay afloat or avoid laying off employees.
The Paycheck Protection Program can be used to cover payroll costs, most mortgage interest, rent and utility costs over an eight-week period, according to the U.S. Treasury Department’s website. Under the program, loans can cover up to two months of an employer’s average monthly payroll and an additional 25%, with a cap of up to $10 million cap.
Loans will be forgiven if businesses maintain staff and payroll and use the money for allowable expenses. The loans are unusual for business – there is no traditional requirement for collateral, personal guarantees of owners, or financial statements.
Businesses can start applying ( application form ) for these loans as soon as Friday, April 3, through local banks approved by the federal Small Business Administration. Several banks contacted didn’t respond to requests for comment, with representatives noting that they were swamped preparing for the program’s rollout.
“Ultimately, the goal is to keep the paychecks flowing and employment happening at different businesses across our state,” said Tom Hoffert, CEO of the Salem Area Chamber of Commerce, in a video posted to Facebook.
The chamber has provided a list of lending institutions that Hoffert said would grow as the program continues rolling out. The Legislature has also issued a guide to stimulus funds available for businesses.
Linda Navarro, president and CEO of the Oregon Bankers Association, said that the program will be an important source of funds urgently needed by businesses. But she said on Wednesday that banks were still awaiting final guidelines from the Treasury Department that would address operational details such as the flow of money.
“I liken it to trying to build an airplane while it’s taking off,” she said.
She recommended that the interested businesses should start talking with their lenders.
On Thursday, Politco reported that banks were expecting a chaotic rollout of the program that could delay the distribution of the money because of problems with the guidelines.
The program and the interest it has attracted was discussed during the Wednesday meeting of the Marion County Board of Commissioners.
Jason Schneider, the county’s economic development director, said there is potential to get money quickly in the pockets of businesses but said there could be hiccups.
“We’ll see how their website and their processes handle the flood of traffic that comes in,” he said.
