While emergency rooms and hospitals have been working overtime to treat and prevent the spread of the coronavirus, with medical supplies running low and doctors putting themselves in immediate danger, other types of businesses have struggled to keep their operations running. That’s because, In response to the pandemic, the U.S. and the world-at-large saw a dramatic decrease in economic activity as governments put in place social distancing measures to curb the dissemination of the virus. With events canceled, shelter-in-place orders enacted, and large gatherings prohibited, businesses like vet clinics, restaurants, and dentists were forced to close their doors indefinitely. Without government intervention, many businesses feared bankruptcy.
Forced to take drastic measures, many businesses began laying off their employees, and as a result, more than 26 million Americans have applied for unemployment benefits since mid-March.
It has now been over a month since the president signed into law the CARES Act, intended to address the economic fallout of the coronavirus pandemic in the United States. Unprecedented in size, this legislation is the largest economic stimulus package in U.S. history, and included in the package is funding for small business loans, the Paycheck Protection Program (PPP). PPP loan funds, implemented by the U.S. Small Business Administration (SBA) can be used to cover a business’s payroll, rent, interest, and utilities for up to eight weeks. The PPP loan may be partially or fully forgiven provided that the company keeps its employee counts and wages stable.
Unfortunately, the initial $349 billion budgeted for PPP loans was exhausted in under two weeks. And many people are questioning the integrity of the program, as it’s been revealed that a substantiation portion of the loan recipients were actually larger companies, ones with more financial resources than small businesses that really need the help. In fact, the National Federation of Independent Businesses reports that about $870 million in PPP loans intended for small businesses was given to 200 publicly traded, large companies.
In response to overwhelming demand, the SBA lending program reopened on Monday, April 27 at 10:30 a.m. ET, with Republicans and Democrats agreeing to allocate $60 billion of the new $310 billion to smaller banks and lenders. As the PPP began accepting new applicants this week, however, the agency’s electronic filing system crashed within minutes. A wave of business owners scrambling to apply online for a small business loan before this second round of funding runs dry overwhelmed the system.
Tweeted SBA Administrator Jovita Carranza, “Unprecedented demand is slowing our system response times. Currently, there are double the number of users accessing the system compared to any previous day during the first round of #PaycheckProtectionProgram funding,”
The SBA typically processes just over $25 billion in loans each year. Tasked with delivering $310 billion in a matter of days, the organization simply was not prepared for the number of business owners looking to apply online for a small business loan. Some people report spending hours on hold with the organization’s call center.
The NFIB Research Center conducted a survey on April 17 and found that most small business owners believe it will take several years for the U.S. to return to normal economic activity. About one-third of these small business owners believe their community will be back to a normal level of activity by the end of the year, and just under 40% said they expect normal levels of economic activity to return in 2021. However, 25% predict we’ll have to wait until 2022 or even later before the economy returns to what we would describe as “normal.”
It simply isn’t business-as-usual for anyone as we enter May. Some industries have been designated as “essential,” like nursing homes and trash removal services. But these workers’ daily lives and operations are a far cry from what they were. Additional precautions have been put in place to keep workers safe, particularly in healthcare institutions like long term care facilities. Deemed “essential businesses,” these organizations may not need to apply online for a small business loan, but they certainly have their own set of struggles.
For business struggling to obtain financial relief from SBA’s overwhelmed and overcrowded program, there are alternatives. From Zapier’s $1 million small business assistance fund to the $500 million Goldman Sachs SMB emergency loan fund, help is being provided from the private sector as well. Other big-name companies are offering their support:
- Amazon: $5 million Neighborhood Small Business Relief Fund for small businesses in Seattle
- Facebook: Small Business Grants Program offering $100 million in cash grants and ad credits
- Google: $800 million to support SMBs, health organizations (even those like senior housing), and health workers
- Verizon: $7.5 million in grants to help small businesses
- Yelp: $25 million for independent local restaurant and nightlife businesses in the form of waived advertising fees
Local and state governments are also setting aside funding for small businesses affected by COVID-19. For instance:
- Arkansas: $12 million from Community Development Block Grants and $4 million from the Quick Action Closing Fund to assist small businesses
- Florida: Small Business Emergency Bridge Loan Program providing interest-free loans up to $50,000 with a one-year term
- Maryland: $50 million Emergency Relief Grant Fund offering grants up to $10,000 for companies with fewer than 50 employees; $75 million Emergency Relief Loan Fund providing loans up to $50,000 to businesses with 50 or fewer employees
- Atlanta: $7 million coronavirus emergency fund allocating $1.5 million to small businesses
- Chicago: Chicago Small Business Resiliency Fund providing small businesses with loans up to $50,000 with terms of up to five years
- Denver: $4 million small business relief fund offering cash grants up to $7,500
- Los Angeles: Small Business Emergency Microloan Program offering loans between $5,000 and $20,000 with 0-3% interest rates
- Syracuse: $500,000 with zero-percent interest, 180-day emergency loans up to $25,000
To learn more about and apply online for a small business loan in your area, visit your state or local government website. No matter what kind of business you run — an industrial plastic distributor, small book store, or clothing boutique — you could be eligible for a loan or grant.