Small business owners face large loan decisions

Posted at 8:18 AM, Mar 31, 2020
and last updated 2020-03-31 08:20:42-04

RICHMOND, Va. -- Relief could soon be on the way for thousands of small business owners hoping to qualify for a loan as part of a $2 trillion federal coronavirus relief package. The deal includes nearly $350 billion for a federal small business loan program called the Paycheck Protection Program.

Brandon Ream, the owner of MVP Therapy and Sports Medicine, said he was hopeful that he’d qualify for the loan, so he could provide relief to his employees he's had to lay off in order to stay in business.

“This is a great group and it’s sad to have to tell people they can’t work,” Ream said.

Like most small business owners, Ream was relieved when Congress passed the COVID-19 relief bill.

“I thought as a small business owner, I was going to be completely left out in the cold, but this package, as it appears today, will help us,” Ream said. “It’s especially encouraging because we’ve laid off all these people and we don’t know if we need to hire them back in order to take the next step in our business.”

The Paycheck Protection Program is designed to quickly get cash into the hands of small business owners.

But the loan forgiveness program, through the Small Business Administration, is only for companies able to keep employees on the payroll.

It covers payroll costs, mortgage or rent, and healthcare benefits for employees.

Another disaster relief program through the SBA is also available for businesses that don’t think they can keep employees on the payroll.

The loan is less restrictive and can be used to cover any business related costs, however it is not forgivable.

“A business has to decide how much they need and what they want those monies to cover,” Ray Nasser, a volunteer mentor with Richmond-based SCORE, an organization that helps advise businesses on SBA loan options and other business related concerns, said. “If you’re a business owner, you need to be making that decision and get a very good handle on what your expenses are. If you were to hire employees, know how much revenue you’ve been getting in the last two weeks and see whether you can sustain that business and pay employees or run the other scenario, which is to shut down and try and save your money until the economy picks back up and all restrictions are lifted.”

For now, Ream is working to develop a telehealth program that will allow rehabilitation services online for patients who cannot come in person. It will also give Ream the opportunity to keep more therapists on the payroll.

Ream said he hoped the Payroll Protection Program can make a difference to his business, but admitted there was still a lot of unanswered questions.

“Right now they’re saying most of that or all of that (Payroll Protection Program) might be forgivable. I don’t know if I trust that yet.” Ream said. “I don’t want to borrow a lot of money and then have it told to me that’s not forgivable, because that would put me out of business.”

According to the Small Business Administration, business owners can apply for both loan programs. Final details are being worked out for lenders and the SBA and should be complete by Friday.