Business Unusual

As Federal Coronavirus Relief Loans Dry Up, Many Small Businesses See Few Options

With the PPP and EIDL effectively closed, small business owners ponder an uncertain future and what to do next.

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The work started to slow down for Brad Danoff in February. It totally stopped in March.

Danoff, the owner of Danoff Contracting, a home remodeling business in Wakefield, Massachusetts, said at that point clients began canceling projects and demanding their deposits back. “I had to pay back a lot of money,” he said.

Despite no work and no revenue, Danoff kept his workers because he heard Congress was putting together funding to help small businesses maintain their payroll. When the Paycheck Protection Program (PPP) opened on April 3, he submitted his application that morning with a big national bank. Two weeks later he learned from a friend that the bank was asking for more documents. He submitted them and called the SBA. He tried applying at another bank, but the window had shut.

On Thursday the $349 billion PPP funds ran out. And for Danoff that meant things had gone from very bad to much worse.

“Ten years of building a business … 100 hours a week for 10 years with no break and I barely get to see my son,” Danoff said. “And now to lose everything because I listened to what the government told me.”

“We can go at zero maybe another month before I have to say ‘what can I do?’”

Danoff is just one of thousands of small businesses across the country that are scrambling to stay alive as government relief programs dry up. Many will pinch pennies or pivot to different business models in an attempt to keep the lights on. But even the most resourceful business owners admit that they’re running out time, money, and even ideas.

‘If this continues, we won’t have a business.’

Normally, MerMaids Housekeeping would clean 25 to 30 houses in a day. But once the state announced a lockdown, the Jupiter, Florida-based business saw almost all work cease.

“Today, when we would normally have 25 houses to clean, we’re at zero,” Noel Lashway, owner of the company said. “If this continues, we won’t have a business.”


Lashway was counting on securing financing through the PPP to maintain pay for her 15 full-time cleaners. When she learned that the program had run out of money on Thursday morning, she said the news was “pretty devastating.”

“We can go at zero maybe another month before I have to say ‘what can I do?’” Lashway said.

Beset by a lack of communication and technical glitches, the rollout of the PPP was rocky from the start. Many small businesses expressed confusion and frustration over how difficult it was to apply — or even find a bank — that would accept their application.

But that didn’t stop millions of business owners from applying. The terms of the program, if available, were a lifeline for many businesses facing total shutdown due to the COVID-19 pandemic.

“The reality is maybe that doesn’t happen and maybe we declare bankruptcy.”

The PPP was intended to mitigate job losses by providing small businesses with loans to cover approximately 2 months of payroll. If the business used at least 75% of the loan to maintain headcount and salaries over an 8-week period, then the majority or all of the loan could be forgiven.

Additionally, many businesses tried to take advantage of disaster relief loans provided directly by the Small Business Administration (SBA). These Economic Injury Disaster Loans initially went up to $2 million, but were later revised to a $10,000 initial forgivable grant and a $15,000 initial loan.

As of April 16, both programs were effectively closed. The SBA announced that the funding allocated for the PPP had been maxed out, and that applications for the EIDL were closed.

For businesses that didn’t get their loans approved before the funding ran out, the options are increasingly more desperate.

Danoff said he’s considering maxing out credit cards, filing for bankruptcy, and starting over again as a sole proprietorship.

“I have a plan. It’s not a great plan. It’s not a fair plan. But it’s a plan,” he said.

“There’s no work for them and they still have families, they still have rent, hey still have water bills.”

For Erin Hayes, owner of a video production company in Massachusetts, the plan is to ramp up video animation services, previously a smaller part of the business, and try to make payroll and supply benefits for her 5 employees. But she admits the ability of the business to do that is anything but guaranteed.

“The reality is maybe that doesn’t happen, and maybe we declare bankruptcy,” she said. “I basically need to prepare myself mentally and emotionally for that.”


‘My employees are family’

The timing of the coronavirus pandemic really couldn’t have been worse for Jessica Throneburg. She had just quadrupled the space for her boutique retail business, Little Details in Garner, North Carolina, when business slowed way down.

“For me, as a business owner, I look at my staff as my family so we’re going to try and take care of them as long as we can,” she said.

Still, she was hoping to secure a PPP loan to cover payroll. Now, with that program stalled, she’s looking at the number of hours her staff works and trying to get creative. That’s particularly difficult for workers’ families.

“We have employees whose spouses have been furloughed so that’s adding a lot of stress,” she said.

Lashway also noted stress among her employees as work freezes up.

“There’s no work for them and they still have families, they still have rent, they still have water bills,” she said.

Congress has proposed replenishing the PPP. Senate Republicans have tried to pass an additional $250 billion in funding for the program. Currently, Democrats are effectively blocking the measure, demanding it include additional funds for state governments, food assistance programs, and assistance for overwhelmed hospitals.

But as of Thursday night, Congress remained at an impasse.

That leaves many small businesses pondering a future where the economy remains locked down and no government aid is in sight.

Hayes described it as a strange space where she’s not in control of what happens next but is still responsible for the success — or failure — of her business.

“We started during a recession, and we were able to build [the business]. We had our down years and times where we scrambled for what we’re going to do next, but it’s strange when nothing is in your control,” she said.

“The failure isn’t my fault but at the same time, it’s still a failure.”

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