WATCH: Cary financial expert talks Paycheck Protection Program
-- ORIGINAL REPORT --
A big concern for so many right now during the COVID-19 pandemic is job loss -- and going through the process of filing for unemployment or the payroll protection program for small business -- is extremely challenging, to say the least.
David Schawel, chief investment officer at Family Management Securities in Cary, joined ABC11 to answer some questions Friday evening. Watch the featured video for the full interview. A partial transcript follows.
That PPP - the Paycheck Protection Program a huge headline today. Tell us for small businesses what this program is.
It's a great question, and just to take a step back, we're kind of in unprecedented economic times. We've had a large shock to the economy. Just this week, 6.6 million Americans filed for unemployment, which was 10 times the record that we saw in 2008-2009.
So we're kind of at an unprecedented scale and the federal government really has two options to help Americans: monetary stimulus, which is interest rates and helping the banks and the other is fiscal, and there's a lot of small business and a lot of medium-sized businesses that are hurting right now. They have no revenues, they're trying to pay employees, and the point of the PPP is to incentivize small businesses to keep their payrolls intact. So what they're offering small businesses is if you keep your employees on payroll, and pay them the same, we'll give you a loan up to $10 million - and it's depending on your payroll expenses - but you have to keep the same number of employees on payroll and keep the compensation the same, and they're willing to pay you up to two-and-a-half times payroll expenses for up to eight weeks, and that would all be forgiven.
What advice do you have for the thousands that are filing for unemployment?
So I think there's a number of different options as part of the CARE Act, obviously, that's there's an opportunity to earn $1,200 per individual depending on your income filing level, which would be a direct stimulus, up to $2,400 a month if you're filing jointly, and an additional $500 per child, so that's one aspect of the CARE Act ... in terms of unemployment insurance, rules and regulations on that are loosening and they're also increasing those benefits by $600 a month, so I think there's a number of different things that the government is trying to reach out and stimulate the economy as we've seen the whole world come to a complete stop at once.
Where do you think the best place is if you're a small business or if you're somebody who needs to file for unemployment? Where is the best place for you to begin?
In terms of the PPP, if you're part of an existing bank, I'd probably start with that first. The banks did get allowed the rules and regulations last night, so they're really trying to scurry and with so many businesses trying to file at once, it's a little bit of a mess right now. But I think that the banks are working overtime to try to get the system going and really get up to $349 billion in the hands of small businesses to keep this economy going. It's a Herculean effort but it's something that's drastically needed.
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