For small businesses wondering how to get money from the $2 trillion coronavirus economic rescue package, the answer is at local banks.
The congressional deal was struck Wednesday. It includes a reported $350 billion for loans to businesses with 500 or fewer employees.
U.S. Rep. Dusty Johnson said the loans will provide up to eight weeks of operating cash for payroll, utilities, and rent or mortgage payments. Loans spent on those items will be forgiven.
Johnson said the U.S. Small Business Administration will use bankers to distribute the money.
“The good news is this is really designed to work with their local lenders,” Johnson said. “There’s just no way SBA or the Department of the Treasury would be able to move $350 billion out onto the street as quickly as we need it out there.”
There is some fear the money may come too late. Experts at Georgetown Law are predicting it could take two months for small business owners to get the loans.
Johnson thinks it’ll happen more quickly. And he thinks local banks will help businesses in the meantime.
“I do think there will be a lot of lenders that will provide bridge financing knowing that help is on the way, that these federal loan guarantees are coming in a matter of days,” Johnson said.
Bankers are weighing that option, said Curt Everson, president of the South Dakota Bankers Association. He also advised businesses to call their banker.
“I think the best advice is if they’ve got questions, communications between businesses and their lenders sooner than later is a good idea,” Everson said.
He hopes SBA moves quickly to get the government’s money into the hands of businesses.
“It better not be months, and if it’s weeks, it better not be very many weeks,” Everson said. “Otherwise it loses its effectiveness.”
Among other items in the rescue package, aid should go to farmers and ranchers through the U.S. Department of Agriculture, according to a provision Johnson said was negotiated into the bill. Laid-off workers will receive money through state unemployment offices. There are also non-forgivable loans for bigger companies, and checks for individuals and families.