NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate is the Northwest Progressive Institute's unconventional perspective on world, national, and local politics.

Friday, April 10th, 2020

The Trump regime’s incompetence is holding up financial assistance for small businesses

These are unques­tion­ably tough times to be a small busi­ness own­er, or to work for a small busi­ness. Small busi­ness­es are the back­bone of the Amer­i­can econ­o­my, but many are cur­rent­ly hiber­nat­ing as a con­se­quence of the many “Stay Home, Stay Healthy” orders in place across the coun­try.

Many of these busi­ness­es are thus trapped.

They can’t bring rev­enue in the door, but they still have bills to pay.

Con­gress sought to help small busi­ness­es with the CARES (Coro­n­avirus Aid, Relief, and Eco­nom­ic Secu­ri­ty) Act last month. The CARES Act autho­rized $300 bil­lion in eco­nom­ic relief for small busi­ness­es affect­ed by the nov­el coro­n­avirus.

Sad­ly, that mon­ey has not reached small busi­ness­es due to the incom­pe­tence of Don­ald Trump’s regime. Our friend Dar­cy Burn­er, her­self a small busi­ness own­er, explained what’s going in a recent pub­lic Face­book post.

So for any of you who are inter­est­ed in the cur­rent sta­tus of help for small busi­ness­es in the COVID-19 world:

Most small busi­ness­es in the US have been ordered by author­i­ties to shut down as part of the stay home orders, and there­fore can’t legal­ly oper­ate to do what­ev­er it is they do. Most have cash on hand to cov­er only a cou­ple of weeks of expens­es with­out rev­enue. We are more than a cou­ple of weeks into the shut­down.

Bills for rent, equip­ment leas­es, etc are still due and still need to be paid.

If the busi­ness has been pay­ing for busi­ness inter­rup­tion insur­ance — a pol­i­cy explic­it­ly to pro­tect a busi­ness in case of a dis­as­ter or order from the gov­ern­ment to shut down — they have already been told by their insur­er that they won’t get any pay­ment.

The insur­ers are uni­ver­sal­ly tak­ing the stance that an epi­dem­ic means the loss isn’t cov­ered, even if the pol­i­cy says it cov­ers the busi­ness when civ­il author­i­ties order a shut­down. (Of course, actu­al­ly pay­ing all of those busi­ness inter­rup­tion poli­cies would quick­ly bank­rupt the insur­ers, since every­one is shut down indef­i­nite­ly.)

It appears that approx­i­mate­ly zero of the Pay­check Pro­tec­tion Pro­gram Loans have result­ed in a small busi­ness actu­al­ly receiv­ing any mon­ey. News sources talk­ing to banks say that the prob­lem is that the SBA has still not giv­en the banks a promis­so­ry note to use for these. So those sto­ries claim­ing that bil­lions have been dis­bursed? None of that is actu­al­ly in the hands of any small busi­ness. And most small busi­ness­es are get­ting dead silence after they apply. Just… noth­ing.

Like­wise, busi­ness­es that have applied for SBA Eco­nom­ic Injury Dis­as­ter Loans are over­whelm­ing­ly being met with silence and zero move­ment of funds. There is no way to check sta­tus.

If you call & wait on hold for 1–2 hours, the nice per­son at the oth­er end of the call will tell you they have no way to check and that even­tu­al­ly you’ll hope­ful­ly be con­tact­ed by a loan offi­cer.

Most small busi­ness own­ers have to per­son­al­ly guar­an­tee every­thing when start­ing a busi­ness. If the busi­ness fails, they lose not just the busi­ness, but also their house, any sav­ings, future earn­ings, etc.

I get that com­plain­ing that the Trump Admin­is­tra­tion is cat­a­stroph­i­cal­ly incom­pe­tent is passe. But in case you were won­der­ing: the Trump Admin­is­tra­tion is being cat­a­stroph­i­cal­ly incom­pe­tent in this too.

Dar­cy Burn­er is the CEO of But­ton­smith, a social­ly respon­si­ble, envi­ron­men­tal­ly friend­ly, union­ized print shop in Car­na­tion, Wash­ing­ton that began as a fourth grade class project. (Dar­cy’s son Hen­ry is the founder of But­ton­smith; the busi­ness was orig­i­nal­ly known as Hen­ry the But­ton­smith.)

But­ton­smith is a trust­ed print­ing part­ner for the North­west Pro­gres­sive Insti­tute, han­dling what we can­not print in-house, like ban­ners and signs.

Although But­ton­smith is cur­rent­ly closed due to COVID-19 and not like­ly to reopen for weeks, you can sup­port the com­pa­ny right now by buy­ing a gift card for friends or fam­i­ly to use when the com­pa­ny is able to resume nor­mal oper­a­tions. Gift cards are avail­able in incre­ments of up to one hun­dred dol­lars.

CBS News cor­rob­o­rat­ed what Dar­cy Burn­er wrote about on Face­book in a report pub­lished ear­li­er this week (Bil­lions “dis­bursed” through Pay­check Pro­tec­tion Pro­gram? Small busi­ness­es say not yet):

Bri­ana and Andrew Volk, own­ers of Port­land Hunt and Alpine Club in Port­land, Maine, said they were approved for a PPP loan on Sun­day, accord­ing to a notice from their banker.

Three days lat­er, though, they are still wait­ing for the funds.

Bri­ana Volk said their bank has not pro­vid­ed any final paper­work to close the loan for their bar and restau­rant — nor is it clear when they will get it. A clos­ing date has not been sched­uled.

In the mean­time, they don’t know what to tell their work­ers, some of whom have already been laid off.

“If we take on the PPP loan and take our staff back on, we may very well be pay­ing them less than what they’d get through sup­ple­men­tal unem­ploy­ment insur­ance that the CARES Act car­ries,” Volk said, refer­ring to the broad­er $2 tril­lion fed­er­al stim­u­lus law that includes the small busi­ness res­cue pro­gram.

As Dar­cy said, and as CBS News report­ed, a big hangup is that the Small Busi­ness Admin­is­tra­tion has­n’t giv­en banks the green light to actu­al­ly make loans yet under the Pay­check Pro­tec­tion Pro­gram. Here’s CBS again:

First Bank, a com­mu­ni­ty and small busi­ness lender in Hamil­ton, New Jer­sey, said it start­ed tak­ing appli­ca­tions for PPP loans and sub­mit­ting bor­row­er infor­ma­tion to the SBA on Fri­day.

So far, fifty loans have been approved.

But First Bank CEO Patrick Ryan said the com­pa­ny has yet to make a sin­gle loan under the pro­gram.

He attrib­uted the hold-up to the SBA hav­ing yet to issue a legal doc­u­ment, known as a promis­so­ry note, required to close the loan.

With­out a signed promis­so­ry note, Ryan said it was­n’t clear the SBA would guar­an­tee the loans and that banks could end up on the hook if bor­row­ers aren’t able to pay them back.

On top of that, the SBA could force the bank to redo the loan, putting the bank’s small busi­ness bor­row­er to the back of what has become a very crowd­ed line for the loans.

Ryan said he expects the SBA to issue the final paper­work by the end of the week. After that, it would prob­a­bly take anoth­er few days before he could begin mak­ing loans.

“Some banks may have gone ahead and made loans, but I would be reluc­tant to do that,” he said. “The SBA has rules. Had we moved for­ward, the loans might have not qual­i­fied. It’s not some­thing I would rec­om­mend.”

Small busi­ness­es need cash bad­ly… now… but they can’t tap the help Con­gress vot­ed to give them because the Trump regime is incom­pe­tent.

The SBA’s inabil­i­ty to pro­vide time­ly assis­tance to small busi­ness own­ers is part of a larg­er pat­tern of incom­pe­tence and cor­rup­tion we have seen the last few weeks.

From an arti­cle last month by The New York Times:

Despite promis­es of a “whole of gov­ern­ment” effort, key agen­cies — like the Army Corps of Engi­neers, oth­er parts of the Defense Depart­ment, the Fed­er­al Emer­gency Man­age­ment Agency and the Depart­ment of Vet­er­ans Affairs — had not been asked to play much of a role.

Even after Mr. Trump com­mit­ted to sup­port­ing the states on Tues­day, the Army Corps of Engi­neers said it still had not received direc­tion from the admin­is­tra­tion.

It’s bad enough that we have a pan­dem­ic on our hands. Not being able to rely on our own fed­er­al gov­ern­ment is mak­ing an awful sit­u­a­tion much worse.

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