The money was issued on a first-come, first-served basis and some banks were overwhelmed before customers could even apply.
The Federal Reserve said Monday it would backstop the loans to help disburse money.
Wells Fargo said it already maxed out on the $10 billion it was able to lend. The bank said it was now going to concentrate on nonprofits and businesses which have less than 50 employees.
Major lenders are unprepared to handle the onslaught of people trying desperately to keep their businesses from going under.
Leslie Tayne is a financial attorney who owns a busy debt solution office in Melville. She said that her small business was forced to close along with millions of other companies -- all because of COVID-19.
"I've never seen anything like this. It's like the lights went out and everyone's income changed in a minute," Tayne said. "We are absolutely dead in the water here. This program, it is a lifesaver."
Tayne warns that money from the Federal Payroll Protection Loan Program is received on a first-come, first-served basis.
Who can apply?
To be eligible for the $350 billion fund, businesses must be listed as having less than 500 employees, be sole proprietors, an independent contractor, self-employed, or be listed as a private nonprofit business.
Where can you apply?
You can apply through any existing Small Business Administration lender.
"It's really important you reach out to your bank and ask them are they part of this SBA approved lender for the purposes of this loan," said Tayne.
Small business owners can find out the amount they are allowed to apply for through a simple calculation.
If your average annual payroll is $60,000, you would then multiply that number by 2.5. The number you end up with, in this case, $150,000, is the amount you are eligible to apply for.
"It starts as a loan; there's no requirement to pay it back in eight weeks. You submit documentation on that it was used payroll, rent, mortgage, utilities, health care, at that point it's approved for forgiveness," said Tayne.
Tayne explained that small businesses are not required to pay for the portion forgiven by the bank, but they are required to pay for the amount that was not forgiven.
"You have six months to start paying it back over the next two years," she said.
Tayne received her loan within about two weeks after applying.
The application is free, there is no credit check, but small business owners should consult their accountants.
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