What Should Small Businesses Do After First Day of Federal Small-Business Loan Program?

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Let's talk about small businesses, specifically, what should they be doing now?

Rebecca Rose Woodland, litigator and legal analyst joined TheStreet to explain what's going on and the actions that small businesses can take now.

Watch the full video above for more.

Video Transcript:

Katherine Ross:
What do small businesses have to understand from the government and their insurers at this stage? Well, joining me today is Rebecca Rose Woodland, litigator and legal analyst. Rebecca, if I'm a small business owner, break down the fine print for me. What do I do?

Rebecca Rose Woodland:
Well today, actually right now, things are happening by the minute, so Katherine, I can start to break down what the stimulus package actually stated it would provide in relief for small businesses, and then I can give you real-time on what I'm seeing on the front lines with my clients is happening.

Rebecca Rose Woodland:
Initially, the stimulus package had stated, and the President signed off, that there would be four major things, we call it the Cares Act. Four major things for the Cares Act for small businesses, immediate advance of $10,000.00, debt relief on existing loans, $25,000.00 bridge loan, and then a program called the PPP, the Paycheck Protection Program. Now within that Paycheck Protection Program, small businesses were allowed 2.5 times the average payroll expense monthly, annual salaries up to 100000, and the loan, that would be a loan that would be forgiven if the employees were kept on, through a certain period of time. The loan amount could not exceed 10 million dollars. So there are a lot of questions now in, from the act to actuality, how are we as small businesses getting this money?

Katherine Ross:
As a small business owner, at this stage, should I even be reviewing my insurance policy?

Rebecca Rose Woodland:
Well, with respect to your insurance, most policies have an exclusion for the pandemic. So I think your first step is to review your insurance policy, see if there is a pandemic exclusion, meaning the insurance policy will not cover for losses as a result of a pandemic. The Coronavirus has been considered a pandemic, it's been claimed a pandemic by the World Health Organization. In that case, if your insurance has that exclusion, you move on to the Cares Act and the stimulus program, if you're within the United States. If you're a small business and you can qualify, then the next step would be to go to the banks.

Rebecca R Woodland:
Now, four days ago, we were told that all major banks and loan organizations could provide these loans. What we're seeing real-time right now on the street is that Bank of America and JP Morgan Chase are confused about a lot of the details. They're also not providing loans to anyone who has not had a pre-existing business checking account with them. We're seeing other loan institutions having major questions about what the qualifications actually are, specifically what the loan amount will be if you have to repay it if it's not forgiven. So a lot of these banks are confused. They don't want to be holding liability if they grant a small business the loan, and then the government says that that small business did not qualify. So we're seeing a tremendous amount of confusion right now on the street with this.

Katherine Ross:
Rebecca, thank you so much for taking the time to chat with us today, and of course, for more on the Coronavirus pandemic, please head on over to thestreet.com.

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