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.
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.