The bailout initially appeared to suffer from a few deficiencies The newly confirmed nuts and bolts of the program resolve some of them
Just business. Photo: David L. Ryan/The Boston Globe via Getty Images/2020 - The Boston Globe When Congress passed a $349 billion bailout of American small businesses last week, the program appeared to suffer from three deficiencies.
Second, it was unclear whether the program would encourage firms to rehire staff they had previously cut. One of the policy’s clear virtues was that it incentivizes firms to retain employees: Although structured as a loan program, so long as businesses do not lay off any staff or impose any pay cuts, the loans will be forgiven after two months . But theoretically, a company might be able to subvert the program’s intention by firing staff before applying for a loan.
Which brings us to the first critical clarification in Tuesday’s guidance: Small businesses don’t need to work through the SBA or its affiliated lenders to secure loans, but, rather, can apply for them at most any “federally insured depository institution, federally insured credit union, and Farm Credit System institution.” In other words, an eligible business owner should be able to walk into just about any FDIC bank and secure enough capital to cover payroll for two months.
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