Sole Proprietorships Not a Priority for Paycheck Protection Program
If you own a small business, you may be excited to hear that President Trump implemented the Paycheck Protection Program. This program authorized $349 billion in forgivable loans to small businesses so that they could continue to pay their employees during the coronavirus crisis, despite having to shut down or see reduced revenue. This money was important, as half of the American economy consists of small businesses.
While the program was open to small businesses and sole proprietorships, small businesses with larger numbers of employees got their loans approved quickly. In fact, even billion-dollar companies who did not need the money—such as Shake Shack, AutoNation and even the Los Angeles Lakers—were able to easily get loans. Those who needed it the most, though—such as struggling mom and pop businesses—were denied. On top of that, many small business owners are minorities, so if they are denied loans, then it gives them more proof that they are being discriminated against.
The Paycheck Protection Program ran out of funds in just days. So what happens now for small businesses who need money to stay in business? Will they be forced to lay off workers? Do they need to shut down permanently?
Sole proprietorships need financial help until the economy can reopen. This may take months for some businesses, based on their location and type of business they operate. While many of them qualify for unemployment benefits, including the extra $600 per week, they are still going to need help paying for business overhead. It has been noted that another $250 billion will be added to the Paycheck Protection Program fund for additional loans, but it is unknown when that will happen.
But will an extra $250 billion be enough anyway? Many experts say no. It seems as though the government wants to focus on bigger businesses and leave sole proprietors and independent contractors.
Another issue is that most banks who are registered to do the Paycheck Protection Program loans only make them available for their current customers. This eliminates a lot of business owners, as many do business with smaller banks that are not accredited by the Small Business Administration (SBA). Banks are not required to do business with all potential borrowers.
It is hopeful that the government will do the right thing and update their guidelines so that the money goes to businesses who need it the most. Larger businesses should not be able to take money away from smaller businesses who desperately need it. It’s unethical and it should be illegal as well.
Learn More About Sole Proprietorships
Sole proprietorships are easier to operate than larger businesses because there are no employees to pay, which means fewer expenses. However, when it comes to government funding, sole proprietors and independent contractors often get shafted.
There are pros and cons for every type of business. If you are interested in becoming an entrepreneur, Orlando sole proprietorship lawyer B.F. Godfrey from Godfrey Legal can help you understand which is the right type of business for your needs. He can guide you toward success. Schedule a consultation today by calling (407) 890-0023 or filling out the online form.