Federal Funds for Small Businesses

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Paycheck Protection Program (PPP):

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What it is: The PPP gives lenders such as banks and Community Development Financial Institutions (CDFIs) $349 billion to make loans with less restriction around who’s eligible and what’s forgivable. This is designed to encourage lenders to provide loans that help small businesses make payroll, provide benefits to workers, and make necessary payments, such as utilities, mortgage, and rent. Businesses who qualify can get the lesser of either two and a half months’ worth of eligible payroll costs or $10 million (Ankin, Gump). You’ll need to have your full time equivalent (FTE) levels the same or similar to what it was before the COVID-19 crisis in the eight weeks after you accept this benefit to maximize what’s forgivable. PPP provides a strong incentive for providers to maintain their staff on payroll, as well as the resources to be able to do so even during periods of closure or low enrollment. Keep in mind, PPP loans are forgivable, so you can also apply for SBA Disaster Relief Loans when PPP money runs out. Learn more about the details of the PPP here.

Who qualifies: Sole proprietors, self-employed individuals, nonprofit organizations, for-profit small businesses, and businesses with multiple locations with less than 500 employees per location are eligible to apply.

How to take advantage of this benefit: Small businesses and nonprofits can apply starting April 3, 2020. Visit the U.S. Small Business Administration’s (SBA) loan program website to find potential lenders that can offer loans to your center. (BrightWheel, 2020)

The loan amounts will be forgiven as long as: (1) The loan proceeds are used to cover payroll costs (75% of loan total), and most mortgage interest, rent, and utility costs over the 8-week period after the loan is made; and (2) Employee and compensation levels are maintained. (Treasury Department, 2020).

How can I request loan forgiveness? You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. (Treasury Department, 2020).

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How much of my loan will be forgiven? You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. At least 75% of the loan must be used for payroll costs for the entire amount to be forgiven. (Treasury Department, 2020).

Do I need to first look for other funds before applying to this program? No. The usual SBA requirement that you try to obtain some or all of the loan funds from other sources has been waived. (Treasury Department, 2020).

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How large can my loan be? Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. (Treasury Department, 2020).

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Read updates on this program from the NAFCC https://www.nafcc.org/file/72e8b170-fe58-4e9d-8333-9cdefa6fb02c.

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What lenders still have funds available for this loan? If your local bank is no longer able to accept applications, check into PayPal and Square, Inc. (Tom Copland blog)

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The Reinvestment Fund is an SBA lender who works specifically with early childhood education programs in southern states including Georgia. (GAEYC resource sharing page.)

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Detailed information on this program from the First Five Years Fund: https://www.ffyf.org/small-business-administration-sba-loans-immediately-available-to-child-care-providers/