The COVID-19 crisis has shifted life as we know it. All parts of the economy have been impacted in some way, especially businesses. Whether it be smaller percentages of sales, furloughing employees, or shutting doors permanently, businesses have been left to navigate the unknown. To alleviate some of the impact, the COVID-19 Aid, Relief, and Economic Security (CARES) Act was passed and signed into law on March 27, 2020. The CARES Act aims to provide fast and direct assistance to American workers and small businesses, and to preserve jobs. Under the CARES Act, the federal government enacted the Paycheck Protection Plan (PPP) to assist small businesses with near-term operating expenses.
This $349 billion SBA lending program offers a 100% government guarantee and covers loans starting February 15, 2020 to June 30, 2020.Companies can use the loan for payroll, interest on mortgage or debt loans, and more. The bonus is if the loans are used to retain company employment, it turns into a grant. Loans are capped at $10,000,000 or 2.5x your average monthly payroll.
So, how has the PPP affected Ohio’s small business industry so far?
The qualifications require businesses to have 500 employees or less.Securing a loan during the first round has not been the easiest, though, so many of Ohio’s small businesses are hoping for a greater impact with the second round. Business owners were challenged with a faulty site for the application process that constantly crashed, and extremely long waiting periods for funds after submitting their applications. Even more cumbersome, many business owners reported not receiving nearly as much funding as they had applied for.
In some cases, business owners were able to secure a PPP loan swiftly. A news source in Dayton reported that after Capitol Cleaners of Miami Valley received its PPP loan, they were able to invite all of their employees spanning 10 locations back to work and maintain pay levels. Capitol Cleaners is responsible for cleaning some of Ohio’s essential workers’ uniforms.
The second round of funding was quickly accounted for, and is projected to positively impact the health of small businesses in Ohio. The SBA approved $2.2B nationally for the second round of funding. According to Dayton Daily News, close to 60,000 small businesses in Ohio were approved for $14B in loans in the first round, and $4.71B in the second round. On average, loan sizes for the second round were $79,000. While loan averages are down from the first round’s average of $206,000, small businesses are hopeful they will see more of the second round’s funding to help survive during these trying times.