CAPITAL REGION – As Congress and President Donald J. Trump put more federal money into keeping small businesses afloat through the economic storm being caused by the novel coronavirus pandemic, local small businesses that received loans in the first round of funding are generally still waiting for their money to come through.
“I’ve applied for money and been told I got it, but I haven’t seen any loan documents,” said Anthony Panza, an owner of Panza’s, a Saratoga Springs fine-dining restaurant. “I applied for eight weeks’ payroll (the maximum allowed), but meanwhile you have utility bills, you have [a] mortgage, you have all these bills coming due.”
The Payroll Protection Program, which went through its first $349 billion worth of funding in less than two weeks, is getting a fresh infusion of $310 billion under the new bill signed Friday.
Panza, whose family-owned restaurant was started on Saratoga Lake in 1938, has another problem others in the restaurant industry have pointed out — the PPP rules require the business to hire people back right away to see the loan forgiven in the future, but right now, with restaurants closed for on-site dining by state order, there’s nothing for cooks and waitstaff to do if they did return. The restaurant is doing takeout now, but that’s enough business for only a few employees.
“The loan, the way it’s written, just isn’t fair,” Panza said. “It’s a loan that has to be repaid within two years. You’re not going to be able to hire (the employees) all back.”
Panza isn’t alone. The National Restaurant Association asked Congress to permit businesses to defer the start date of PPP loans until after local stay-at-home orders are lifted, and to allow more than 25 percent of the loans to be spent on fixed costs like rent and utilities.
So far, the National Restaurant Associate estimates that more than eight million restaurant employees have been laid off or furloughed, and the industry will lose $80 billion in sales by the end of April. The industry has already lost one of its big dining days — Easter — and Mother’s Day, on May 13, will also fall before restaurants will be able to re-open.
“These businesses are hoping the federal government relaxes this regulation and allows them to use these funds when they can re-open, as that makes sense,” said Saratoga County Chamber of Commerce President Todd Shimkus. “That change hasn’t happened yet but we’re hopeful the Treasury or Small Business Administration will adapt the rules at some point to fix this problem.”
At Ambition Coffee & Eatery in Schenectady, owner Marc Renson is also waiting for his money to arrive, though he’s been notified of approval. He expects his funding to come from the $310 billion PPP infusion just approved and signed into law. The process, he said, was frustrating because the electronic system set up to handle the applications was being overwhelmed.
“In a normal circumstance, it was very tedious, because what should have been a 15-minute process took three hours, because the site kept crashing,” Renson said.
He has kept most of his waitstaff working by using them as takeout delivery drivers, which allows him to avoid the fees charged by services like GrubHub and Doordash. He said the 20-year-old cafe is delivering orders as far away as Amsterdam to the west and Hudson to the south, as long as the order is big enough. “We’re ambitious and we thought outside the box, that’s how we work,” he said.
While money has yet to arrive in their respective bank accounts, Panza and Renson are among the fortunate business owners in that they got their loans approved.
A LendingTree survey released Wednesday found that only five percent of business owners nationally have received a PPP loan, though 60 percent had applied for funding. Some survey respondents told LendingTree they struggled to communicate with bankers — and then the $349 billion emergency funding ran out of funds after 13 days.
White House officials say the federal government is doing a good job with the program. In a statement Thursday, the White House said that the SBA through April 20 had issued $20.3 billion in loans to 81,075 New York state small businesses.
A separate issue facing restaurants and hospitality businesses is that their employees may be able to make more money on unemployment, since much of their compensation when working comes from customer tips. Unemployment compensation is $600 per week — though many applicants report they’ve had trouble navigating the overwhelmed state unemployment system.
“The restaurants have a very legitimate issue with the PPP as do other hospitality-related firms whose employees are now collecting unemployment,” Shimkus said. “The issue is that as soon as a loan is processed and the money is deposited in the company’s bank account they have to rehire right away. Because these operations are not open, these employees are being paid more via unemployment than if they were rehired.”
Any business considering applying now that the program has new funding should try to work with a local bank, Shimkus suggested.
“It’s definitely easier to work with a bank that you already have a relationship with,” Shimkus said. “If you have already applied but were not approved before the money ran out, you should be confirming your application is ready to be processed when more money becomes available. If you haven’t applied, do it now. The increase in funding for the PPP could run out this time even faster than the first.”
State Assemblyman Angelo Santabarbara, D-Rotterdam, said it’s important for the federal money to get to the small businesses they were intended for, rather than some of the larger businesses that secured loans in the first round of PPP funding.
“I know a lot of businesses applied, I know some of the ones who applied earlier were successful — but a lot of businesses were not successful,” he said. “This funding really has to focus on our local economies if we want to be successful here.”
There are about 600,000 small businesses in New York state, which employ 4.1 million — hundreds of thousands of whom have now lost their jobs.
“(Small businesses) are the ones that are hard-hit, and they’re the ones that have the most limited resources,” Santabarbara said.
As Assembly chair of the Legislative Commission on Rural Resources, he and other commission members — including Assemblywoman Carrie Woerner, D-Round Lake, and state Sen. Neil Breslin, D-Albany — are urging that rural businesses also share more fully in the federal financial assistance.
“Rural areas provide natural resources that much of the country depends on for food, energy, water, and recreation. Yet, despite the essential role they serve, rural areas are notoriously forgotten and critically underfunded,” Santabarbara and other commission members wrote in a letter Thursday sent to the New York State Senate and Congressional delegation.
The new legislation opens the small business disaster assistance program — which is getting a $50 billion infusion — to farmers, including hard-pressed dairy farmers.