Confused and Waiting for Promised Financial Relief, Small Business Owners Turn to Each Other for Answers

In his worst moments, Brian Buell worries that a decade of work creating a clientele and a community around his business won’t make it.

But that thought doesn’t last long.

“The darkest moments to me, the moments that have brought tears to my eyes is the thought that I’m going to lose everything I built the last 10 years,” said Buell, the owner of Commonwealth CrossFit in Somerville, Massachusetts. “And the flip side to this is I’m not going to lose everything I built over the last 10 years. I’m going to do something.”

Buell is one of millions of small businesses scrambling to adapt to an unprecedented shutdown of the economy as state and local governments attempt to slow the spread of the coronavirus. And like many fellow business owners, Buell is attempting to access some of the hundreds of billions of dollars in financial relief the federal government allocated for small businesses.

The rollout of these programs, such as the Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP) loans, has been rocky. Business owners across the country have complained of confusing application processes, lack of communication, and general inability to get to the funds.

“I’m not going to lose everything I built over the last ten years. I’m going to do something.”

For some, like Buell, relief from these programs buys valuable time to weather the storm while pivoting products and services for customers practicing social distancing.

“My worst case scenario is we totally rebuild what we offer and to whom,” Buell said, adding he’s maintaining payroll and offering virtual workouts for customers — 80% of which have continued their membership to date.

But many businesses say the funding is a lifeline that would allow them to keep paying employees, even as revenue dwindles to nothing. The inability to access the promised funds quickly — or in many cases even receive confirmation that their application is being processed — has led to a mixture of panic, anger and fear.

Confusion and glitches, anger and resignation over EIDL relief and the SBA loans

Trish O’Brien Digliodo isn’t a stranger to working with banks or the Small Business Administration (SBA). As the President of Paramount Pursuits, a small business incubator in Western Pennsylvania, she’s personally helped many businesses, especially minority-owned businesses, navigate financing and loans.

But even she doesn’t know the current status of her applications for an EIDL through the SBA or for a forgivable loan under the PPP with her bank, despite having an established relationship with her local banker.

“You have business owners just trying to get access to the money they have been told is available to them, and they have no idea what is going on. And you call the SBA and they don’t know what’s going on.”

“I do this for a living and it was overwhelming,” she said. “You have business owners just trying to get access to the money they have been told is available to them, and they have no idea what is going on. And you call the SBA and they don’t know what’s going on.”

O’Brien Digliodo notes that she advises her 400 clients to build a relationship with their bank from day one. But those without prior relationships are likely to have an even tougher time getting through the long, digital queues of eager borrowers.

Cynthia Scofield, a client of Paramount Pursuits, took that advice and has even referred business to her local bank in the past. Despite that, she’s unsure of the status of her application for a disaster loan under the Paycheck Protection Program. The lack of clarity is concerning, as she continues to employ 15 people at her restaurant and her hotel, re-deploying them to do tasks like cleaning and doing takeout services.

“I’ll pay them until I have no more money,” Scofield said. But she noted that she’s “at the end of my rope here. There is no more rope.”

One of the chief complaints among small businesses is the lack of clarity around how the programs are supposed to work, how much money is available, or even how to apply.

The $50 billion EIDL program was announced on March 12, well before Congress moved to pass a stimulus package worth more than $2 trillion. At the time, the guidance provided said loans could go as high as $2 million at a fixed interest rate of 3.75% for small businesses.

The confusion was almost immediate as the existing disaster loan program run by the SBA required a state’s governor to request and certify that specific counties in their state be declared as impacted by a disaster. Only then could businesses in the impacted area apply for the loans directly from the SBA.

The SBA later relaxed those rules, allowing governors to gain eligibility for the entire state. Almost 2 weeks later, all 50 states were declared eligible for the loans by the SBA.

Recently, the SBA announced changes due to the demand for the loans, advising it would provide a $10,000 forgivable advance to borrowers in addition to an initial loan capped at $15,000. On April 10, the SBA announced another change stating that instead of a $10,000 advance, businesses could receive $1,000 per employee up to $10,000.

“It’s devastating to hear business owners that have been in business for 30 years and they’re losing everything.”

Business owners also were confused on where to apply. Many rushed to use the SBA’s disaster relief portal, but were told later to re-apply at a different URL to streamline applications. (That portal is located at https://covid19relief.sba.gov/.)

Many small business owners, however, expressed even more confusion on the process for getting access to the $349 billion Paycheck Protection Program included in the CARES Act. That program offered businesses up to $10 million in loans that could be forgiven so long as the business used at least 75% of the loan to keep employees paid over an 8-week period. Officials of President Donald Trump’s administration said the program would be administered quickly.

While the SBA is working with the U.S. Treasury Department to administer the PPP, businesses need to apply through an eligible bank to be approved. Most banks, though, reported lack of communication on how the program should work even as they saw a flurry of applications worth tens of billions of dollars in the first day alone.

That led many banks to only accept applications from businesses that had open commercial relationships already in place. Many other banks simply didn’t accept applications at all. An analysis earlier this week of the top 100 SBA 7(a) lenders found that more than half weren’t accepting PPP applications.

“At a certain point, we will run out of money.”

Small business owners reported a rush to work with smaller local banks only to be told they should apply to larger national banks instead. Many said even the big banks had glitches with their application process.

Buell initially attempted to apply for a loan through a smaller local financial institution because he had an existing home equity line with it.

“They’ve been to my house,” he said.

Initially, the banker he was working with suggested they would be able to help, but later said they were prioritizing applications from businesses with an existing commercial account and he should look elsewhere. This was on a Friday at 5 p.m.

Buell went to one of the larger banks with an online application. But he immediately ran into trouble. “I filled out the application 7 times, and I got booted every time,” he said.

The bank’s online portal kept changing his birthdate no matter how many times he corrected it. It did the same to his date of incorporation. It requested several documents be uploaded, but only allowed him to upload one of the documents. After 2.5 hours, he submitted the application with the incorrect dates and incomplete documents in hopes it would at least kick off the process.

After tweeting at the bank, he was able to confirm his application had been received through a private Twitter chat. Nearly a week later, when — even if — he’ll get approved for a PPP loan is unknown.

“I’m not even confident that my application has even been received,” Buell said. “I know for sure that I have incorrect information on it and it’s missing documentation.”

Small businesses crowdsource as communication fails

Seeking to fill the void, small business owners are crowdsourcing information on social media, interactive documents, and on collaborative sites. Most of the time they’re swapping data points and anecdotes. Sometimes they trade war stories.

“I cried this morning. I feel like there is no real help for all of us,” reads one post on Facebook.

“I applied the first day the EDIL was open. NO MONEY-NO REPLY…I applied for the PPP on the first day. NO MONEY-NO REPLY,” reads another.

A Facebook group called “SBA Disaster Recovery Loans” has become a real-time ticker for the collective experience of small business owners attempting to sort rumor from fact. As of April 11, the group had 11,503 members. Based on data shared by the group’s moderator, the number of posts had grown by more than 7,000% and comments had increased by over 21,000% between March 11 and April 7.

Daniel Lichtenberg has applied to 7 different banks for a PPP loan to keep paying his 3 full-time and 4 part-time employees. He runs a video production company in San Francisco. Currently, the business is generating no income as every project was canceled or delayed. He’s kept his staff on the payroll and given them tasks, like updating the website.

“At a certain point, we will run out of money,” he said in an email.

Lichtenberg said he attended several webinars from the SBA, called the agency, and read up as much as he could on how to access the PPP and EIDL programs. All the expertise, he said, was very high level and not helpful. Ultimately, he created his own Google spreadsheet of banks he had contacted or reviewed the website of and captured whether they were accepting applications from new or existing customers.

He purposefully made the spreadsheet public and editable in hopes business owners could update it and point others in the right direction.

“The PPP is a program that essentially asks small business owners to administer ‘unemployment’ by paying their employees when there is no work,” Lichtenberg said. “But, for the privilege of administering a government aid program, I have done 60-plus hours of research and work, without any idea whether or not I will receive the funds.”

PPP Loan Applications By Status

Daniel Lichtenberg created an open-sourced spreadsheet so other business owners could track down banks offering PPP loans.

Married couple Rita and Duncan MacDonald-Korth launched a similar collaborative site. Rita and Duncan, both of which run their own small businesses (retail and a financial media site, respectively) launched the COVID Loan Tracker site, which attempts to provide data around how many business owners have applied and received EIDL grants or PPP loans — and from which banks — through an online survey visitors can submit.

The idea came out of their own frustrations attempting to find a bank that would take their application, as well as the technical glitches that made the application process messy. They thought crowdsourcing among fellow small businesses would provide some real, useful data where currently there is a vacuum, Duncan said.

“The people who need these loans are in dire straits and the government owes them clarity around when these loans are going to be dispersed,” Duncan said.

As of April 11, the site had received over 1,800 submissions from other small business owners and surpassed $1 billion in requested loan amounts tracked. Duncan said he hopes the growth of the site will provide accountability among the government agencies administering the programs. And that it will provide some insight to other desperate small businesses.

“A lot of people still feel in the dark,” Duncan said. “So many people have said if I don’t get this (loan) in a week, I’m done.”

O’Brien Digliodo agrees that time is of the essence, and many businesses won’t be able to make it in time for the relief money to flow through the system.

“It’s devastating to hear business owners that have been in business for 30 years and they’re losing everything,” she said.

Editor’s Note: Neither Workest nor Zenefits is affiliated with, nor endorsing, the financial assistance programs listed in this article. This article is for informational purposes only. We cannot advise on how to apply for any of the programs listed.