The U.S. Small Business Administration’s COVID-19 relief loan program, which included the $349 billion Paycheck Protection Program, was supposed to help carry small businesses through the crisis.
The PPP was made available to small businesses April 3, and was designed to provide direct incentive for small businesses to keep their employees by providing money that would cover payroll, rent, mortgage interest and utilities for two months. If the borrower kept their workers and didn’t cut their wages, the government would forgive most of the loan.
But the program hit its limit April 16, leaving struggling Clovis businesses to fend for themselves as congress debated how to replenish the program.
“It has been absolutely horrible,” said Angie Paul, owner of Jus’ Jo’s near Shaw and Willow Avenues.
Paul applied for the PPP loan within the first few hours that it was made available. She said it took a full week for her bank to send her an application to complete the process, and has yet to hear back on whether she will receive assistance.
Jus’ Jo’s is still open, but is only doing takeout orders. Paul said she was forced to cut staff in order to pay bills.
“We are doing about 18 percent of our sales,” she said. “We were able to barely pay our rent, we were able to barely pay our PG&E. We are down from a staff of 20 to a staff of four.”
Under the PPP, companies and nonprofits with fewer than 500 workers per location could apply for loans of up to 2.5 times their monthly average payroll in 2019. But several national chain restaurants were still able to tap millions of dollars from the program.
Ruth’s Chris Steak House, which operates high-end restaurants across the country, received $20 million from the program. Shake Shack, a national burger chain, received $10 million. Those companies were just a few of the nationwide chains that received millions from the program. A recent Forbes analysis found that 71 publicly traded companies received PPP loans before funding ran out.
After facing public backlash, both Ruth’s Chris and Shake Shack said they would return the funds they received.
“It’s supposed to be for small businesses, not these huge franchises and corporations,” Paul said. “I don’t know one small business that got any of that funding.”
Cora Shipley, President of the Businesses Organization of Old Town and owner of three Clovis businesses (Ivy & Lace, Hearts Delight, and Scoops Soups & More), said she applied for a PPP loan but didn’t receive any money.
Her story echoes Paul’s, as she also had to tell staff to stay home in order to make ends meet.
“I did have to furlough half my staff. I would love to bring them back, I’m only doing takeout so I’m doing about 20 percent of my normal revenue, so I can’t bring anybody back until I get that loan. A lot of us are in that same position,” Shipley said.
Shipley criticized the program, saying more of the money should have gone to small businesses.
“I don’t agree with the program at all, 500 employees is not a small business. I think it should have been geared to probably 50 or less. The small businesses that we are trying to save are single owners, they might have one or two employees. Some of the bigger restaurants have up to 20 employees. Those are the ones that need to help,” she said.
Zahi Faleh owns Triangle Drive In, which has five locations, including one in Clovis. He said he applied for a PPP loan after not hearing back on an application he submitted for the Economic Injury Disaster Loan, which was made available to small businesses before the PPP.
But he never received money from the PPP loan either.
“I tried to apply for the PPP through my bank,” he said. “They really didn’t know what was going on. Then I tried a couple of days later and they weren’t taking any more applications.”
Faleh said he felt as if his bank, Westamerica, was “picking and choosing which applications they would take.”
A recent New York Times story revealed that some of the nation’s largest banks, including JP Morgan Chase, Citibank and U.S. Bank, prioritized the applications of their wealthiest clients before turning to other loan seekers. According to the article, loans of more than $1 million accounted for 4 percent of those approved, but made up for 45 percent of the dollars disbursed.
“It just goes to prove to you that the small businesses, they get the short end of the stick,” Faleh said.
Community banks say they were simply overwhelmed by the amount of loan applications, including Central Valley Community Bank.
“As a preferred SBA lender with a 40-year record of serving businesses, CVCB has also been overwhelmed by the demand for the program,” Central Valley Community Bank President James M. Ford said. “Our dedicated lending professionals continue to diligently assist clients, finalizing approval documents and sharing next action steps for those who were accepted by the SBA Paycheck Program. All clients who are on the waitlist will be contacted individually to share the status of the program.”
According to the SBA, 112,967 PPP loans were approved in California. The loans totalled for more than $33.4 billion.
Snowflake Designs, which creates and sells gymnastic leotards, but recently pivoted to selling facemasks, is the only business the Roundup spoke to that received a PPP loan. Owner LaDonna Snow said her business received $223,000.
Snow said she and her husband applied for the PPP loan with Central Valley Community Bank on April 6.
“You have to do a very extensive worksheet to qualify for it. We went through it three times, making sure that we got everything correct,” Snow said. “We got it just under the wire before they said there was no more money.”
While she is grateful that she received the loan, Snow said she is still concerned about surviving the aftermath of the crisis.
“My biggest concern is surviving the aftermath. We lost our entire customer base, the gyms are all closed, the kids are not doing sports. How long is it going to take for all that to come back?” she asked.
Businesses remain hopeful that they will still receive money after the program is replenished. President Donald Trump signed legislation Friday, April 24 that will provide $484 billion to restore the PPP and fund other programs to fight COVID-19.
The legislation directs $310 billion to the PPP, including $60 billion that will be reserved for community banks and small lenders. The rest will go to hospitals, testing efforts and emergency disaster loans and grants.
Fresno SBA Director Dawn Golik said the administration will begin accepting applications again at 7:30 a.m. Monday, April 27.
Golik said businesses owners can find a list of SBA lenders on the SBA website.
“On the SBA and Treasury web pages, there is a tremendous amount of resource information that businesses can be using now to calculate how much in loans they want to apply for, how to calculate their payroll and other things that would allow them to get the information they need,” Golik said.
Experts expect the new round of funding to go fast, as most banks still have applications in queue that were never processed the first time, according to The Business Journal.