Kevin Richie has forecast a busy March for his Austin-based lighting rental company. After all, it was time for the city’s annual South by Southwest festival, and his company, Stage Spot, was packed.
“Then the hammer fell,” Richie told the Texas Tribune. “For us, business basically disappeared overnight.”
Companies like Facebook and Google had already started canceling events as fears grew over the spread of the new coronavirus. As the mayor of Austin, Steve Adler canceled the entire 10-day event a month ago, Richie saw the writing on the wall.
“We rent lighting equipment for events, and as soon as the events stopped happening, our business was gone overnight. “
Now Richie is one of thousands of small business owners scrambling for federally guaranteed loans that will help keep his business afloat and avoid laying off workers. Loans are part of a $ 2,000 billion bill which passed Congress late last month. The purpose of the bill was clear: to spend federal money to compensate for an economic downturn as public health officials begged Americans to stay home.
Of that, Congress allocated nearly $ 350 billion to small businesses – businesses with fewer than 500 employees. If the operators use the money to retain their staff, the loans will eventually be canceled.
Lawmakers drafted the bill for the sake of simplicity, but even so, small business owners in the state of Texas are tearing their hair out trying to decipher Small Business Administration guidelines and the 880-page invoice.
“Overall it’s a great idea,” said Jim Clark, an Austin-based accountant who answered client calls. “It’s a good plan, but in practice, it’s going to be complicated.
“Everyone is trying to do their best, but it’s difficult,” he said.
Rep. the United States Michael mccaul, an Austin-based Republican, told the Tribune in an interview that the goal was to minimize red tape. Rather than directing small business owners to federal government bureaucracy, members of Congress have ordered most loans to go through banks.
“We tried to make this as easy as possible, so instead of going through the bureaucracy of the SBA… all you have to do is go to your local banker, with whom you normally have a checking account or with who you are dealing with, “he said.
As a result, many banks have been in regular contact with customers to offer advice while banks digest and clarify government direction.
“I actually feel very lucky because we have a banker,” Richie said. “It doesn’t get the money out any faster. It just lowers my frustration level a bit.
In addition to his banker, Richie has confided in recent weeks that he has relied on his accountant and his lawyer.
“We have an accountant, an accountant and a lawyer, but two years ago that was not the case,” he said. “And if that had happened two years ago, I don’t know what I would do because there is no way we would have had last year’s books in a way that the bank would be happy to see them. “
So many business owners may not have this kind of support at hand. There are other resources for business owners, with the caveat that almost everyone involved is currently overwhelmed.
Small business management
Small business administration has a website describing the forms of support included in the Coronavirus Aid, Relief and Economic Security Act. The two most frequently used by small business owners are the Paycheque Protection Program and the Loan advance in case of economic disaster. The PPP process will go through the banks while the EIDL program involves online application. An applicant cannot use money from both programs to pay for the same expenses.
There is also an SBA hotline, 800-659-2955, which operates from 7 a.m. to 7 p.m. central time.
Many offices within the Texas delegation restructured in light of the coronavirus outbreak in order to deal with both the public health crisis and subsequent economic problems associated with the containment of large swathes of the population.
McCaul and other members encourage small business owners to call their representatives and US Senate offices for advice on what to do next.
“It is the responsibility of members of Congress to educate their constituents on the legislation they have passed,” McCaul said.
Staff cannot offer business advice, but they can educate voters about member-run city tele-hotels and other educational programs for the public. Additionally, staff members can refer Texans to nonprofit organizations in the district who can further advise business owners on the steps needed to apply for loans or other avenues of information.
As to the legislative aspect of his work, McCaul said the SBAdemands are moving at a steady pace – so much so that he expects Congress to approve funding another slice of money for small business owners in the coming weeks.
Consulting for small non-profit businesses
Across Texas, there are dozens of nonprofit organizations serving small business owners.
These groups have staff on site who can help small business owners understand their options. Some offer other forms of educational outreach, including webinars.
The federal government has a directory for Texans to search for various groups of small businesses by location. Some of these organizations deal with the large small business sector, while other groups focus their resources on women and minorities.
And there may be resources beyond the options in federal legislation. In San Antonio, a group called the LiftFund began providing small business loans of up to $ 25,000 in mid-March, with grants and donations from banks, municipalities and businesses.
Patience in the midst of frustration
Presumably every entity involved in securing these loans and grants to small business owners will be inundated for days, if not weeks, to come. Experts urge patience even in the midst of frustration and existential livelihood fears.
Thousands of people are jamming the phone lines. And because Americans are encouraged to stay at home, the option of walk-in tours is non-existent.
“We’ve been criticized for this crisis, for what’s going on,” said Richard Sifuentes, director of the University of Texas at the Small Business Development Center in San Antonio.
In addition, credit institutions must exercise due diligence in granting loans, which also takes time.
But Sifuentes is optimistic that once the rules are clarified and the system is in place, the process of putting money into the accounts of small business owners will begin to move faster.
“The message is really for companies to be persistent, patient and stick to it,” Sifuentes said. “And of course, small business owners are resilient.
“Over time, it will get better,” he added.
“I have 30 days”
Janie Barrera is President and CEO of LiftFund, the San Antonio-based group focused on helping small business owners.
“The systems are going to get clogged,” she admitted. “Not just ours…. You just have to be persistent and tenacious and persevere. “
And almost every market player interviewed for this story emphasized the need for Americans to be as friendly as possible duringstrait. These Texans urged patience not only with overwhelmed institutions but also with each other, as rents, mortgages and bill payments come in the form of IOUs rather than checks.
As for Richie, the owner of the lighting rental company, he continues to sweat over how he will keep his doors open and his staff employed.
“I know we will survive,” he said. “We just have to get through these few months.
“I am confident that the government will fix this problem next month,” he added. “I have 30 days to get it right.”
Mitchell Ferman contributed to this report.
Disclosure: Steve Adler, former chairman of the Texas Tribune board; Facebook; Google; the University of Texas at San Antonio; and South by Southwest financially supported the Tribune, a non-profit, non-partisan news organization funded in part by donations from members, foundations and corporate sponsors. Financial support plays no role in the journalism of the Tribune. Find a complete list of them here.