By Bob Bong
Congress passed a bill weeks ago to provide assistance to small business owners hit hard by the stay-at-home orders in response to the COVID-19 pandemic.
Other relief efforts have been created by Chicago, Cook County and Illinois.
In theory, all of them are designed to get money into the hands of business owners who have been shut down or working men and women who have been out of work since mid-March because of the pandemic.
The goal is to keep these small businesses, such as beauty salons, barbers, fitness centers, alive.
In practice, many business owners are in danger of missing out.
“There are many different ways to get money,” said Felicitas Cortez, executive director of the Orland Park Area Chamber of Commerce. “The question is when will the money be available. Some small businesses will not survive if it takes too long to get the money.”
One program, the Payment Protection Program (PPP), was designed to give business owners loans that would be forgiven if the money was used for payroll, rent or mortgage expenses. It also provided loans for independent contractors not normally eligible for relief programs.
What some business owners are finding is an array of hurdles to getting that money including banks not ready for applications, banks not participating, banks only dealing with existing customers.
“I’ve heard that some applications changed after they were originally filed,” said Cortez. “I’m also hearing that some lenders are taking care of customers they already have a relationship with.”
Cong. Dan Lipinski (D-3rd) said that the program will be a much-needed boost for small businesses.
“With more than 710,000 applications, the Paycheck Protection Program is instrumental in providing relief to small businesses and keeping workers employed during this crisis," Lipinski said. "Some businesses in the Third District and around the country have faced challenges trying to get access to funds from private lenders. Congress has been working with the SBA, the U.S. Treasury, and banks to address the challenges these businesses are facing. Recently, some online lenders were approved to provide loans under the program, and we will continue to look for innovative solutions to help businesses secure these much needed loans. As we work to craft the next relief package, Congress is planning to make adjustments to improve this program and explore other ways to bring relief to American workers and families. As always, my office is available to help any individuals and businesses in the Third District that are in need of assistance.”
Billionaire entrepreneur Mark Cuban said Monday some banks are to blame for the delays.
Cuban said banks have "implemented all these hurdles" that were not supposed to be a part of the program, which was established by the government's $2 trillion coronavirus relief package that was passed in late March.
"Banks are playing themselves. They're being banks and they're trying to determine if the credits are good and that's leading to a lot of small businesses that are left out in the cold," Cuban said on " Squawk Box ."
Cuban, owner of the NBA's Dallas Mavericks , said the companies he's invested as part of "Shark Tank" have faced challenges in applying for the loans. Cuban said some banks have questioned a company's gross margin and was therefore uncertain about making the loan.
"I've tried to call the banks and say, 'No, that's not the point behind the [Paycheck Protection Program] loan.' This is not about that. This is a guarantee by the government and this is supposed to turn into a grant if you retain all your employees," Cuban said.
"Until we get through that friction, there's going to be a lot of issues and there's going to be a lot of people laid off and a lot of companies that go out of business," he added.
"This is a hurry-up environment where we need to get money in small business' hands so that they can retain their employees," he said.
Cuban has been particularly outspoken during the coronavirus pandemic. He has put pressure on Washington lawmakers to prioritize workers in economic stimulus legislation. He's argued any company that receives government aid in such legislation should be prevented from buying back its stock .
Palos Heights Mayor Bob Straz, market president at CNB Bank in Palos Heights, said smaller, community banks were more responsive than larger banks in doling out the stimulus money.
“We’ve been approving applications. I processed three loan documents today,” he said Monday.
“We have funded a good number of applications,” he said. “It’s a great program.”
"Larger banks can take longer to approve the applications and dole out the money."
He also said there had been problems with independent contractors seeking stimulus money.
“The rules are still not ready,” he said.
The Small Business Administration, which is handling the federal loan program, has been deluged with applications and has approved 629,000 for $160 billion as of April 9.
The city of Chicago has been swamped with some 7,000 applications since starting to receive them on March 31 and had approved only 10 as of April 8.
Nearly 7.5 million small businesses are at risk of closing their doors permanently over the next several months if the coronavirus pandemic persists, according to a survey published Tuesday by Main Street America, a network of more than 1,600 commercial districts comprising 300,000 small businesses.
Around two-thirds of entrepreneurs said they may have to shut forever if business disruption continues at its current rate for up to five months.
More than 30% are at risk if the status quo persists for two months, according to the survey , which polled in excess of 5,850 small business owners.
These figures point to 3.5 million small businesses closing permanently in the next two months, and 7.5 million over the next five months, according to Main Street America.
Nine in 10 respondents to the survey, conducted online from March 25 to April 6, have fewer than 20 employees.
CHICAGO SMALL BUSINESS RESILIENCY FUND PROGRAM
Total fund amount: $100 million
Eligibility requirements: Fewer than 50 employees and revenue decline of at least 25 percent
Terms of the loan: Loans of up to $50,000
ILLINOIS SMALL BUSINESS EMERGENCY LOAN FUND
Total fund amount: $60 million
Eligibility requirements: Located outside Chicago with fewer than 50 employees and 2019 revenue of less than $3 million
Terms of the loan: Up to $50,000 with at least 50 percent toward payroll
ILLINOIS TREASURER BUSINESS BRIDGE LOAN PROGRAM
Total fund amount: $250 million
Eligibility requirements: Shutdown businesses or non-profits with less than $1 million in liquid assets or $8 million average annual receipts
Terms of the loan: Amount determined by lender
U.S. PAYCHECK PROTECTION PROGRAM
Total fund amount: $349 billion
Eligibility requirements: Fewer than 500 employees* and payroll not exceeding $100,000
Terms of the loan: Loans up to $10 million
U.S. ECONOMIC INJURY DISASTER LOAN PROGRAM
Total fund amount: $17 billion
Eligibility requirements: Fewer than 500 employees and lost revenue due to COVID-19
Terms of the loan: Loans with an advance of up to $10,000 that doesn’t have to be repaid