In Oregon, over 400,000 workers have claimed unemployment since the COVID-19 crisis began ripping through the state’s economy in March – a devasting number that paints an equally depressing picture of how the state’s small businesses have been faring during the pandemic. Small businesses are the backbone of the US economy, employing almost half of the entire workforce. If the unemployment numbers are jumping to the extent they are, it means only one thing – small businesses are suffering. Big time. Even as Oregon moves into a phased re-opening, the devastation wrought by the crisis on its small businesses isn’t something that’s going to be resolved overnight. If you’re a small business owner who’s been hit by the crisis, here’s what you need to know about how to apply for a small business loan in Oregon.
The Paycheck Protection Program
In March, the government signed into law a series of measures designed to provide financial relief to businesses impacted by the crisis. Of these, the Paycheck Protection Program is perhaps one of the most significant to small businesses. Designed to provide companies employing fewer than 500 workers with a much-needed cashflow injection, the Paycheck Protection Program offers low-interest loans intended to support payroll and other crucial operating costs such as business rent, mortgage interest repayments, utilities, and other fixed business debts. The program has a number of attractive features (a fixed interest rate of just 1%, no fees, no penalties for early repayment, 2-year repayment terms, a streamlined application process, no requirement for collateral or personal guarantees and automatic payment deferral for the first 6 months (with further deferral possible at the discretion of the lender)) but unquestionably the biggest draw for most businesses is the option to apply for full loan forgiveness.
Note that forgiveness isn’t guaranteed, and you’ll need to demonstrate that you’ve met the conditions for acceptance – namely, that you’ve used at least 75% of the loan funds towards payroll (this includes severance pay, holiday pay, commissions, and medical and childcare benefits as well as salaries) with the remainder spent on other crucial business costs, and have retained your current payroll for at least 8 weeks past loan origination. If you’ve fewer employees at the end of the 8 week period than you had at the start, you won’t be eligible for forgiveness unless you can prove you’ve lost employees through no fault of your own, and have made every effort to replace them. If you fulfill all the obligations of forgiveness, the full amount of the loan (including any accrued interest) will be wiped. Loans are capped at $10 million, with the maximum amount that can be claimed determined by average payroll costs. To check how much you can claim, simply multiply your average monthly expenditure on payroll by 2.5.
Who Can Apply for the Paycheck Protection Program?
If you want to apply for the Paycheck Protection Program in Oregon, you’ll need to meet the specific eligibility criteria laid out at SBA’s website. Those eligible includes:
- Concerns that have been in operation since at least Jan 2020 and can demonstrate significant, negative financial impact as a result of the crisis
- Entities that meet size standards for industry and size
- Non-profit organizations, veterans organizations, and tribal concerns employing fewer than 500
- Organizations with a NAICS Code beginning 72 with more than one location and no more than 500 workers per location
- Sole proprietors, independent contractors, and self-employed persons
How to Apply for the Paycheck Protection Program in Oregon
All applications must be made directly through an approved lender. To check which lenders have been approved to participate in the program in Oregon, search the directory available on the SBA’s Paycheck Protection Program lender search tool. A brief word of warning before you fix your cap on any particular lender. Numerous small businesses have complained of disproportionately long waiting times for their applications to be processed, a complaint that seems particularly common among those businesses looking to borrow relatively small amounts. Make inquiries with the lender about the number of applications they’ve processed versus the number they’ve received. If the difference in numbers is significant, move on.
Equally, be wary of any lender that pro-actively approaches you: scammers have already started targeting small businesses with too good to be true offers… stay vigilant and don’t give any information to anyone until you’ve verified they’ve been approved to participate in the program. Once you’ve made your decision about which lender to proceed with, print and complete the PPP Borrower Application Form. The form will need to be submitted, together with your business records, by the application cut off point of June 30, 2020.
The Economic Injury Disaster Loan
Like the PPP, the Economic Injury Disaster Loan is designed to provide financial relief to those companies with 500 workers or less who’ve been impacted by the crisis. Chief terms to note include a low-interest rate of 3.75%, a repayment term of up to 30 years, and no fees for applying. Although the EIDL doesn’t offer the full loan forgiveness possible under the PPP, it does offer the very appealing prospect of a fully forgivable advance of up to $10,000. The advance essentially acts as a grant and is paid within 3 days of loan acceptance. If you fulfill the eligibility criteria for both programs, you’re welcome to apply for both the PPP and the EIDL, providing the loan funds aren’t used for the same purpose. So, for example, if you’ve already taken a PPP for assistance toward payroll, you can only apply for an EIDL if you intend to use it for operating costs.
Who Can Apply for the Economic Injury Disaster Loan?
Applications for the EIDL are currently limited to businesses involved in agriculture only. If your business falls outside of this scope, check back on the EIDL portal regularly for details of any changes in the eligibility criteria.
How to Apply for the Economic Injury Disaster Loan in Oregon
To apply for the EIDL, you’ll need to submit an application directly through the SBA. The online application process has been streamlined for ease of use and involves little more than confirming your business details, ownership and payroll information, and details of any prior criminal activity. If you need any assistance in completing the application, contact the Customer Service Center on (800) 659-2955 or via email at email@example.com.