Insult to Economic Harm: Small Businesses ‘Angry and Desperate’ About Emergency Lending in Limbo

0

Small businesses faced with the dramatic drop in cash flow caused by shelter-in-place orders and social distancing thought they would have quick federal help of $ 10,000 to weather the storm. But for many, the program initially put in place for natural disasters has so far not borne fruit.

David Lee is the owner of Blue Moon Construction and employs another person. They do specialized land clearing for landowners in St. Petersburg, Florida. It opened in 2006 and survived the Great Recession.

He said that at a time when 80% of his industry was closed, he was proud not to miss any payments. But now, in the midst of yet another historic unemployment and economic crisis, it’s different.

Related | Government rush to help businesses has bumps

Credit courtesy of Blue Moon Construction LLC

“We started to see some weakness in sales in early March and it’s like looking into oblivion,” Lee said.

So Lee and over a million other businesses across the country applied for a Natural Disaster Emergency Loan, or EIDL.

Historically, the program has helped victims of natural disasters like Hurricane Harvey. The US Small Business Administration goes to a community and offers low income loans with 30 year repayment schedules. But the process is long.

When the $ 2 trillion CARES law was passed, it expanded the program and – recognizing that businesses needed money fast – added an advance of up to $ 10,000. A business did not have to wait to qualify for the loan and would not have to pay it back. And unlike the Paycheck Protection Program – which has a lot more funds and aims to keep employees on the books – that money could be used immediately for rent and bills.

The money was supposed to be in people’s bank accounts within three days.

Lee was hopeful.

“You know we planned that $ 10,000 would take us through June 15,” he said.

But the money didn’t show up, and the SBA changed the way it would be distributed. From now on, each company would be allocated $ 1,000 per employee. So instead of the $ 10,000 Lee expected, he was looking for $ 2,000.

“This will have a significant impact on our ability to cover our operational costs and honor our equipment loans. It’s a nail in the coffin for small businesses.

Many of the smallest and youngest companies have few employees, and they are the most desperate for capital, according to a recent report
Federal Reserve Bank investigation. A Brookings report estimated that 2 million businesses in the United States are working without more than a few weeks of reservations.

And that assumes that these companies are getting the money. Twitter and Reddit are inundated with comments from business owners saying they haven’t heard from the SBA, not even a confirmation email after submitting their application.

“No. no email or call or there is no place to enter a confirmation number on the website and check the status,” said Kim Yonkee, who operates a series of stores from detail with his wife in Eureka Springs, Arkansas.

One of over 130 responses to TPR's reddit post asking people to tell us about their experiences with EIDL.  No one said they had received the advance or a loan.

Credit reddit

One of over 130 responses to TPR’s reddit post asking people to tell us about their experiences with EIDL. No one said they had received the advance or a loan.

Their stores have been closed since March 20 in this more ghostly than touristy town at this point. She says she tried calling the local SBA, but no one picked up.

Other TPRs interviewed for this story described being on the phone for hours at a time only to receive conflicting information.

“I think you have a lot of really terrified, desperate, angry people who can’t get any help,” she said, “And the businesses that can’t pay their bills and their owners can’t pay , who can’t pay their banks, who can’t pay. You know, I think it’s a chain reaction. It’s a domino and it starts right here with the small businesses.

Ted Langley is a Chartered Accountant in Spanish Fort, Alabama, outside of Mobile. All last week he has been helping neighbors and friends file EIDL applications and they still keep coming.

“I bought lunch, brought it back, and never had the first bite of fries until I’ve already had two phone calls from people asking me for information about the EIDL program,” Langley said.

He estimates he has helped 50 businesses in the region file so far. None saw any money. Many give up hope that they will one day.

“This is the worst mess I have ever seen in my life,” said Langley, a former IRS agent.

Screenshot of more than two dozen companies who responded to TPR via email.

Screenshot of more than two dozen companies who responded to TPR via email.

Congress set the three-day limit for the SBA. Four senior Democratic lawmakers
sent a letter be concerned about the delay in getting money to businesses last week.

“The CARES Act provided for a grant of $ 10,000 within 3 days of an application to the SBA’s Economic Disaster Loan Program to help cover operating expenses while the loan was being processed. . Are SBA staff prepared to meet this requirement? ”Asked the senators.

The SBA did not respond to comments on this story, but it is clear that it is inundated with requests for both EIDL and PPP.

“The SBA has received an overwhelming number of economic disaster loan applications since the announcement of advance grants for the economic disaster loan,” said a tweet from the Massachusetts SBA.

twwet_0.PNG

“The frustration there is understandable. Rome wasn’t built in a day, ”said a separate tweet from SBA Mass.

He pledged to pay the advance – under the new lower terms – this week.

It was then deleted.

Despite the difficult deployment of EIDL and PPP, it is not clear that everyone in government is on the same page.

“They are not late. It’s been flawless – It’s been flawless so far, well beyond our expectations, ”President Donald Trump said during a press briefing on Saturday when asked about the federal response.

David Lee watched and was disgusted.

“It’s really insulting,” he said. “And, you know, we’re the guys who are there everyday. And we have been ignored.

For many businesses, the slow response has left them abandoned and any response may come too late.

Paul Flahive can be contacted at [email protected] or @PaulFlahive.

TPR was founded by and is supported by our community. If you value our commitment to the highest standards of responsible journalism and are in a position to do so, please consider doing your
support gift today.

Copyright 2020 Texas Public Radio. To see more, visit Texas Public Radio.



Source link

Share.

About Author

Leave A Reply