Few small businesses in Missouri have received loans or other funds from the federal rescue packages as the agency charged with managing the programs is overwhelmed by an unprecedented crisis, according to those working with companies to tap into funds.
Small businesses, those with less than 500 employees, can apply for either a disaster loan or a share of the $367 billion set aside to keep workers on the payroll of companies during the COVID-19 emergency.
The Economic Injury Disaster Loan scheme and Paycheck Protection Program (PPP) are managed by the Small Business Admnistration (SBA), with banks enlisted to funnel the money to firms.
But one St. Louis business development organization, which partners with the SBA to help smaller companies, had not heard of any that had yet received funds since the signing of the CARES Act in late March.
Lynette Watson, regional director in St. Louis of the Small Business Development Center (SBDC), said some PPP loans have been approved and, under the legislation, banks then have five days to release the funds. SBDCs provide technical help and coaching to small businesses and aspiring entrepreneurs.
"Business owners are frustrated and angry," Watson told the St. Louis Record. "People are getting angry but you are taking an agency that was minuscule and growing it to three times its size and trying to do that in three weeks.
"They are doing the best job they can do given the circumstances. There is not nearly enough staff and they are trying to hire people at the same time."
But, Watson added, political promises on timelines and access to support are being made that cannot be kept.
"I think people are starting to become frustrated, but continuing to work towards getting either a disaster loan or PPP. That is their only life line so they trying to continue to navigate," said Watson, adding that the local St. Louis SBA office has worked hard to deliver good information and reach out to the different banks..
Over 99 percent of America’s 28.7 million firms are small businesses, with the majority, 89 percent, employing fewer than 20 people, the Annual Survey of Entrepreneurs has reported. And, nearly 40 percent of all enterprises have under $100,000 in revenue, according to a P Morgan Chase
Under the CARES Act, companies are eligible for disaster loans of up to $2 million, with interest rates capped at 3.75 percent for businesses and 2.75 percent for nonprofits and long-term repayment plans.
The Paycheck Protection Program provides small businesses with funds to pay up to eight weeks of payroll costs, including benefits. The loans will be 100 percent forgiven if employers use them to cover eligible expenses.
"The biggest question (company owners) are asking is 'do we have to have the same number of people on the payroll'," Watson said,
"They are just not used to paying people when they are not working. But we advise them it is so (and) they will be available when companies are able to go back to business as usual."
Brad Jones, Missouri state director of the National Federation of Independent Business (NFIB), said small business owners are innovating, consolidating, and looking for opportunities by making calls and contacts they did not have time to do prior to the emergency.
"But they are having to lay off staff, and that's like laying off a member of your family," Jones told the St. Louis Record.
On the federal support, Jones said, "I think there is some real confusion as far as exactly which of the loan programs to apply for, and how they qualify. For some of our smallest members there is frustration with the SBA."
Following a canvass of its members, the NFIB is predicting that a certain number of, but definitely not all, businesses will be able to ride the crisis out, if they get help quickly.
Jones said that the big banks have been able to act quicker than the local community institution, largely because communication between them and the SBA has not been "very good."
"But the good thing about local banks is they know you, are familiar with your business, more willing to work with you, give you more scope, and maybe more lenient," the NFIB representative said.
At a national level, there is some debate, and concern, that the billions set aside for small businesses under the CARES Act will be quickly depleted, and that much of the money will go to franchisees of large corporations.
"A lot of those are independently owned, small, but they do have the backing of the corporate offices, and their resources," Jones said. "The independent pizza store owner does not have those resources or expertise."
Watson, of the SBDC, said her organization is working with all types of businesses, from a one person seamstress to a 400 strong manufacturing company.
One problem is that the rules and process for applications has changed several times, she said. While the questions from most companies are now more focused on "are we there yet," Watson said sole proprietors were only allowed to begin their applications Friday. She expects another rush this week.
."They have different challenges, as the way they pay themselves can be different," Watson said.
Otherwise, many businesses are having problems getting relief from landlords, with Watson estimating about 30 percent are able to do deals.
"It has not been consistent," she said. "When people have a relationship with their landlords, and it is more than a transaction, they are getting relief. If it is just a transactional relationship they are having a hard time. It is not so much turning down, just not reaching."
Utilities are working with small businesses very well, Watson added.