The US administration helped large American companies, but in the second stage, which was supposed to provide money for small businesses, problems arose.
This is reported on Friday, May 1, by Reuters.
The second phase of the state program started on Monday. $З20 billion should be distributed among small enterprises in the form of loans, which should support the business in the context of the economic crisis. A feature of the program is that the loan can be forgiven to the borrower. This factor played a key role in the attractiveness of the program.
As News Front previously reported, the first tranche of $350 billion did not even reach small businesses – it was distributed among large network companies that could survive without support.
However, the program was adopted in a hurry, and serious concerns arose in the expert community. The fact is that there is no strict state control over the implementation of the program. Together with the bureaucratic nuances of providing the necessary documentation, this can lead to a huge number of unforeseen debtors appearing in the country.
“It is likely that every state emergency relief borrower expects his loan to be forgiven, but it’s not that simple”, – said Paul Mersky, head of the Independent Bankers Community of America.
For the loan to be forgiven, the borrower must spend 75% of the amount received on the salary of employees, and during the first two months. The remaining 25% may be spent on other operating expenses, such as rent and utilities. Money spent on other needs must be repaid at an annual rate of 1% for two years. The problem is, bankers believe, that it will be very difficult to calculate partial forgiveness amounts for borrowers.
“I think it can be a little complicated because there is a different question with each answer”, – Chris Giamo, head of commercial banking at TD Bank in New York, said.
Moreover, the mechanism of debt relief is not even defined. The founder of Maryland Vittles Catering, Josh Mason, told the reporters about this in a comment.
“I studied all the recommendations, but I did not know how much will be forgiven, and how many will not be forgiven. I think the ambiguity will lead to a certain mess when it all ends”, – he said.