Anxiety Rises as Small Business Owners Wait for Relief Fund
Financial aid was supposed to come in three days.
Instead, some Nevadans claim that it has been weeks since they completed their application for an economic disaster loan backed by the US Small Business Administration.
One of two congressional-funded small business relief programs under the $ 2 trillion CARES Act, Economic Disaster Injury Loans are designed to provide businesses with fewer than 500 employees with l money they can use to meet their financial obligations, such as rent or payroll. On paper, the first $ 10,000 of the disaster loan is expected to be paid in advance within three days of the request. This amount is considered forgivable – an emergency subsidy for economic damage. Any additional amount borrowed – up to $ 2 million – is offered with a low interest rate.
“The app wasn’t too bad,” says Scott Miller, the sole owner of Geeks on the Go, who applied after reading the program in the press. “You get this receipt. It’s that thing that gives you an application number. “Don’t call us, we’ll call you. No phone number. No address. Nothing. “We have it” and it checks your email. “
Miller says he looked for ways to get an update on the status of his disaster loan application, but found nothing. He is in indefinite limbo.
The Majestic Repertory Theater is also in limbo. The majority of the company’s revenue comes from single ticket sales at its 99-seat theater on Main Street in the Arts District. The four-year-old theater was scheduled for a series of “Hedwig and the Angry Thumb,” a popular cult musical that would have filled seats. But entertainment events like this were among the first things to be banned in the name of social distancing.
Two weeks ago, Majestic’s artistic director, Troy Heard, applied for a $ 10,000 economic disaster loan. He says the funds are needed to keep Majestic afloat during the mandatory shutdown and possibly after, depending on what the world looks like after the shutdown. He knows that even after the restrictions are lifted, some people may be wary of the gatherings and immersive experiences that Majestic specializes in.
He has yet to hear about his candidacy.
While he waits, he applies for another grant specifically designed for arts and culture organizations – $ 2,500 here, $ 500 there. He’s also working with members of the company to find a way to monetize virtual shows.
With statewide budget cuts looming and a tsunami of people asking for help, he hopes the powers that be will not overlook the importance of the arts to communities and culture.
“It’s entertainment, damn it,” he adds. “We need it. It’s escape. The greatest Hollywood movies came out of the Great Depression. Let’s not forget that. You have to have fun or else you’ll go crazy.”
Different program, same problems
Economic disaster loans are one of the two relief options funded by the CARES Act. The other option is the Paycheck Protection Program, which offers forgivable loans of up to $ 10 million to small businesses on the condition that they retain (or rehire) their employees for a fixed term. Congress has allocated $ 350 billion for the payment protection program.
Sole proprietors are eligible for the program. When small business programmer Scott Miller found out, he asked for this in addition to the disaster loan. First, he thought he had taken a break. Banks said they prioritize existing customers and Miller has a business account with an existing account. But when he got a question about something on the app, he found himself with no one to turn to for help.
“I’m stuck and there’s no one to talk to,” he says. “They tell you not to call. Branches are all closed except for teller-based transactions. “
Miller is not sure where to go from here. He and his wife, who run the business together, live off their savings. Neither can apply for unemployment benefits through the state, because is not yet configured to process requests for self-employed workers.
“I recognize the need to have done what we needed to do,” he says of the non-essential business shutdown, which shut down all of its small business clients in mid-March and prompted them to end. to their services and projects with him. “The risk to people’s health was too high. But it’s difficult when you support the weight.
Still, he considers himself lucky because he has no employees who rely on him.
Emily Smith does.
The CEO of the Nevada Blind Children’s Foundation said she and members of the nonprofit’s board of directors were already talking about staff and budget cuts when the payroll protection program was passed and became an option. “It could be our saving grace,” she recalls, thinking.
She filled out an application. Then another. She estimates that she must have reviewed the process 10 different times over the past few weeks as the directions kept changing. Bankers did not have good advice. She continued to need to find additional supporting documents. Fortunately, a board member had a connection to a bank, which could have helped move the process forward.
Last Smith heard, an account representative at the bank told him that they were in the process of “revamping” their internal system so that they could process simple requests like the foundation more quickly. He was told that after his application process, the foundation could see the money in 10 days.
That sounds like good news, until Smith sees reports that some banks have already reached capacity with apps or that banks have already handed out billions of dollars.
“You must be asking yourself: where are we on this list? Will we get this?
Smith says she has already cut her own pay and laid off staff. At the same time, she has tried to adapt their operations to continue to meet the needs of the medically fragile children they serve. Like the Clark County School District, where most of their students are enrolled, they have gone to great lengths to ensure that the families they are connected with have their basic needs met and emotional support.
She says that before making the cuts, one of her last hires came to her and told her they would be okay with being fired.
“(They said), ‘I just want the organization to be okay, and I hope I can come back someday.’ You don’t find people like this every day. This loan option would allow us to bring people like that back. “
So many questions, no answers
The issues surrounding economic disaster loans and the payment protection program are not limited to small business applicants.
Friday, the senses. Catherine Cortez Masto and Jacky Rosen signed a letter urging SBA administrator Jovita Carranza must follow Congress’ mandate to make emergency grant money available within three days of request.
“Small businesses across the country are reporting that although they are eligible and have applied for (a disaster loan) and then applied for the (grant), they are do not receive the advance», Reads the letter. “Businesses are receiving conflicting advice on when to receive these vital funds, and many businesses can’t afford to wait as they try to keep their employees on the payroll and pay the rent.”
Nevada attorney Brian Shapiro said his law firm saw an increase in calls from small business owners inquiring about bankruptcy.
“They can’t weather the storm that long,” he said. “A lot of these small businesses were hopeful that if they got that lead they could survive a month or two on a streamlined budget.”
But now many are weeks in the process and fail to see the light at the end of the tunnel.
“The belief that they will receive it has collapsed,” Shapiro adds.
The lawyer took to social media to try and draw attention to the issue. He also prepared bankruptcy documents, but did not file anything, instead advising his clients to wait to pull the trigger until there was an emergency to file. Maybe things will get better and relief will come.
Even senior officials in the Small Business Administration have voiced their grievances over the execution of the paycheck protection program. The Washington Post Late last week, the comments from SBA Nevada District Manager Joseph Amato were reported in a recorded teleconference with small business owners earlier in the week.
“(Banks) which had no problem to take billions of dollars Free money as a bailout in 2008 are now the biggest banks that resist helping small businesses, ”Amato said.
At the time Amato made his comments, several major banks, including Chase and Wells Fargo, had not signed up as lenders in the Paycheck Protection Program. The only major bank that had – Bank of America – only accepted applications from existing customers. Since then, progress has been made with lenders, but small businesses continue to report problems finding a lender to process their request.
The obstacles, both real and perceived, have some critics questioning whether the smallest of small businesses will be overlooked in favor of companies large enough to have a finance person dedicated to navigating the process, but still small enough. to be considered a small business by the SBA standard of 500 employees. (And even then, there are exceptions for some industries that allow companies with even more employees.)
Saul Ramos, Nevada District Assistant Director of the SBA, admitted to the Current issues raised publicly about loans, but encouraged people to keep trying and be patient. He says the SBA fixed some of the issues, including streamlining the app so that it takes much less time than when launching the programs for the first time.
Ramos couldn’t give a timeline for how quickly economic relief should be expected, nor did he comment on which lenders might prioritize given the massive influx. number of requests and the limited amount available.
“The banks process the requests,” he said.