Get 40% Off
🤯 Perficient is up a mind-blowing 53%. Our ProPicks AI saw the buying opportunity in March.Read full update

U.S. small businesses wait impatiently for government aid that could be slow to come

Published 04/01/2020, 07:03 AM
Updated 04/01/2020, 07:10 AM
© Reuters. FILE PHOTO: A person in a mask walks on a nearly empty street in the coronavirus outbreak near the Treasury Department in Washington

By David Henry, Heather Timmons and Elizabeth Dilts Marshall

NEW YORK/WASHINGTON (Reuters) - As soon as New York officials began detailing their response to the coronavirus, Matt Preis knew his staff might be in trouble.

His Brooklyn-based pet company Chuck & Buddha's cares for animals while their owners work or travel. But as his customers suddenly found themselves at home under government orders, business dried up.

"I have never seen anything like this in my lifetime," said Preis, who employs three full-time workers and several others part-time. "Even the downturn in 2008 didn't affect independent dog walkers too much, except there were a lot more of us all of a sudden."

Like many other small-business owners who spoke to Reuters, Preis is hoping new government programs might keep him afloat.

But the application process can be confusing, with local, state and federal programs touting initiatives that do not immediately offer much-needed access to cash. And while the federal government wants to disperse funds quickly, logistical hurdles - including a lack of staff to vet mountains of applications - will be hard to overcome.

Over the past few days, Preis has contacted relevant agencies, his bank and financial advisers. As of Tuesday afternoon, he had been given just two hyperlinks and was working on applications.

"I don't know what the future holds for many small companies, which include our mom-and-pop dog-walking operation," Preis said.

Seeking to help millions of business owners who have seen their operations either shut down or dramatically curtailed by the coronavirus pandemic, Congress last week passed a $2 trillion stimulus package that includes $349 billion aimed at small firms through the Payroll Protection Program.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

It covers eight weeks of payroll and some other operating expenses through a forgivable loan of up to $10 million for businesses that have roughly 500 or fewer employees.

The program is retroactive from Feb. 15 so employers who laid off workers can re-hire them through June 30, according to guidance provided by the Treasury Department on Tuesday. It appears to offer broad coverage, including for self-employed individuals, independent contractors, non-profits, military-veteran organizations and tribal groups.

"Speed is the operative word," Jovita Carranza, administrator of the Small Business Administration (SBA), said in a statement. The SBA is the main agency through which money will flow from the Treasury Department.

But for many owners, relief may not come quick enough - their revenues and supplies gutted after many local and state governments ordered business closures in mid-March. Some authorities have also expanded restrictions since then.

Kelly Klein, CEO of Groennfell Meadery in Saint Albans, Vermont, whose business has basically shut down said she has not gotten clear information about the federal loan program, despite reading information online and talking to her banker.

Her five employees are waiting to hear if they remain employed after May.

"Without something we wouldn't be able to keep our employees," she said. " My biggest goal is to keep them and of course make sure there's a business for them to come back and work for."

EASIER SAID THAN DONE

The SBA is sure to be overwhelmed. It issued $28 billion in loans last year, and will have to process more than 10 times that amount in just three months with limited staff, sources in Washington and in the banking industry told Reuters.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Many declined to be identified as they were not authorized to speak about it.

Complicating matters, the White House wants to be the clearinghouse for all information about the coronavirus, making it hard for agencies to help banks understand the program better, people briefed on the discussions about the program said.

Lenders must verify that borrowers had specific employees on their books at the time they claim, and that their other costs are legitimate, which can take time. They must also follow requirements to prevent fraud and protect customer information under the Bank Secrecy Act.

"This is the kind of program that in ordinary times would take a year to get started," said Greg Baer, CEO of the Bank Policy Institute.

Banks have been telling customers to be patient and asking them to get relevant paperwork ready so that loans are processed quickly when it all comes together. Some expect cash to begin moving as soon as Friday.

Huntington Bancshares Inc (O:HBAN) CEO Stephen Steinour said he expects to have staff working seven days a week on extended shifts through the end of June and to hire outside contractors for additional support.

"There's going to be an enormous flow," he said.

Latest comments

It is all Bull ***fill out an application and wait forever ? Open the *******place we cant be closwd for ever . Some will fie some will survive lets move on
Ya my buddy who works in the industry is going bonkers. They're (government) changing the rules everyday.
*grabs popcorn* this will be difficult. wow.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.