In this Thursday, April 2, 2020 file photo, Jovita Carranza, administrator of the Small Business Administration, speaks about the coronavirus in the James Brady Press Briefing Room of the White House n Washington, as Vice President Mike Pence, President Donald Trump listen. Millions of small businesses are expected to apply for a desperately needed rescue loan Friday, a stern test for a banking industry that has had less than a week to prepare for the deluge. Small businesses will be seeking loans from the $349 billion Paycheck Protection Program, which was put in place to help them retain workers and pay bills during the coronavirus pandemic. Credit: Alex Brandon | AP

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The $350 billion federal loan program aimed at easing the financial pain of the new coronavirus for small businesses rolled out on Friday, less than a week after being signed into law amid heavy demand and some initial trouble submitting applications.

The so-called Paycheck Protection Program, which will provide loans capped at $10 million and forgive them if the money is spent on payroll and other necessities, is the largest and newest in a suite of new programs aimed at helping small businesses.

[Our COVID-19 tracker contains the most recent information on Maine cases by county]

Here is a guide to the new program and the other options available for those who may need smaller amounts of quick cash.

What does the Paycheck Protection Program do?

The $350 billion program, that was a key part of the $2.2 trillion stimulus passed by Congress and signed into law by President Donald Trump last week, will guarantee loans to businesses with less than 500 employees that can prove they have been affected by the coronavirus on a first-come, first-served basis.

The loans are capped at 2.5 times a business’ monthly payroll or at $10 million — whichever is smaller. The loans will be forgiven if businesses maintain payroll for eight weeks and use the money for payroll, mortgages, rent or utility bills, though 75 percent of the forgiven amount must be spent on payroll. Workers who make $100,000 or more cannot be covered under the forgiven amount.

The loans carry a 1 percent interest rate, but interest payments are deferred for six months under the program. The portions of the loans that are not forgiven must be repaid within 2 years.

How do you apply?

The program opened on Friday for small businesses and will open on April 10 for independent contractors and self-employed people. The Small Business Administration has released a two-page application, although it will take some time for businesses to prepare the information required to submit that form. The application is filed with a bank or credit union.

In Maine, many of the state’s largest banks and credit unions are among the SBA-approved lenders processing the loans. Jen Burke, a spokesperson for the Maine Credit Union League, said more institutions are expected to join the program in the coming days.

How has it worked so far?

The bill creating the program was only signed last Friday, so the program has rolled out at warp speed. The U.S. Treasury doubled the interest rate applicable to the program after lenders said the initial rate was below their costs. CNBC has reported on confusion among businesses about some of the program’s finer points.

The National Federation of Independent Business on Friday said many businesses were having trouble submitting applications. David Clough, the organization’s Maine director, said he had heard from a handful businesses that they had made repeated unsuccessful attempts to submit applications.

On Friday afternoon, at least six banks in Maine have gotten applications into the system, said Chris Pinkham, the CEO of the Maine Bankers’ Association. It was unclear if any were accepted, but banks in other states reported decisions coming back quickly, he said.

It’s unclear how long the funding may last. Demand was expected to be high in what Dana Connors, the CEO of the Maine State Chamber of Commerce, described as “a rush to the door” for anxious businesses looking to get a share of the money. The federal government has promised near-immediate processing of loans, though many banks have said they will need more time and guidance to process them.

There are smaller programs available.

The SBA maintains a longer list of programs that could apply to small businesses. The Economic Disaster Loan Program, which was expanded in the stimulus bill to apply to the coronavirus, provides up to $2 million in loans that are more flexible than those in the Paycheck Protection Program but not forgivable. The program includes a grant of up to $10,000 that does not have to be repaid.

The Finance Authority of Maine is also offering several special loans and other programs for businesses affected by the virus. A new coronavirus response package from the Maine Legislature enshrined a program allowing small low- or no-interest loans of up to $5,000 to individuals who lose income because of the virus.

Watch: How does COVID-19 spread?

Michael Shepherd

Michael Shepherd

Michael Shepherd joined the Bangor Daily News in 2015 after three years as a reporter at the Kennebec Journal. A Hallowell native who now lives in Augusta, he graduated from the University of Maine in...