Small businesses say they could run out of money before federal loans come through
Some entrepreneurs hurt by the coronavirus shutdown say they're facing delays tapping emergency loans from the Small Business Administration, even as the White House calls for billions more in funding for small businesses.
The SBA announced a coronavirus disaster loan program Thursday, offering up to $2 million per business to help small firms overcome the loss of revenue amid the health crisis.
SBA cautioned at the time that each state must seek and receive a disaster declaration from the SBA before the agency can start lending in that state. Entrepreneurs say that process, required by law, is holding things up.
The dire straits some businesses are facing underscore how close to the bone many entrepreneurs function. A few days' delay wouldn't matter to a large corporation, but one can make or break a small business, they said.
"People are still taking bills out of my account and I don't have money coming in," said Jason Smith, who employs seven people at M&M Car Care Center in Merrillville, Indiana. "It's going to get tight really quick."
Smith said his wife called the SBA on Monday after hearing about the loan program. She was on hold for an hour and forty minutes before getting disconnected, he said.
The couple also tried the SBA website. At first the site "crashed," Smith said. Later that day he accessed the site and found that Indiana hadn't yet been granted the disaster zone status.
Smith says he's not pointing fingers. "I understand there's a lot of turmoil going on, with people trying to figure out what to do," he said. He estimates that he needs about $50,000 to be able to pay his bills and employees for the next several months.
The SBA didn't immediately respond to a request for comment Wednesday. On Tuesday, the agency said it was easing the program requirements to enable states to receive emergency declarations faster.
Indiana Gov. Eric Holcomb, a Republican, announced Wednesday that the state had requested a disaster declaration from the SBA.
The Trump administration is working with congressional Republicans on an emergency stimulus package that would devote an additional $300 billion toward helping small businesses avoid mass layoffs, The Washington Post reported Wednesday. It wasn't immediately clear whether the SBA would play a role in that lending.
Small businesses employing fewer than 500 people contributed about 44% of the country's gross domestic product and employed about 48% of the workforce in 2014, according to the SBA and the Census Bureau. Businesses with fewer than 20 workers employed 18% of American workers that year.
Calls to protect small business are growing more urgent as signs of layoffs grow around the country.
Mary McNamara, owner of Mountainside Mercantile, an antiques store in Kodak, Tennessee, said she wasn't yet eligible for an SBA loan, because her state had not received a disaster declaration when she checked Wednesday morning.
"My family has been in business since 1955," she told The Post. "Our storefront is tied to the tourism seasons in the Smoky Mountains. March is when we see an uptick in sales, after weathering the lean winter months. With pretty much everything closed here until at least early May, there is a significant possibility our family will lose our business."
"Our landlords have never been willing to accommodate us in the past, so we are fairly certain they won't now," McNamara said.