Businesses challenged in securing CARES Act financial assistance

Business owners, leaders say more needed to help locals

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Tal Oron Cohen, owner of catering business Ba-Li Cravings in Ithaca, saw her entire business model change when COVID-19 hit.

“Everything for my catering business has been canceled. It started with the events at Cornell and Ithaca College that canceled back in mid-March and went on to my weddings,” Oron Cohen said. “Even some of my October weddings have been canceled.”

Oron Cohen was used to offering Mediterranean cuisine and desserts for everything from small events up to 200-people weddings, but COVID-19 left her out of events to cater. She was able to offer pay-what-you-can birthday cakes for local families to get some income, but like many county businesses, she’s still struggling to make ends meet.

To get by, Oron Cohen applied for several financial assistance programs on the national and local level, but that process has proven complicated and difficult.

Many of these programs were started this month, not long after Tompkins Weekly’s first investigation into how businesses like Ba-Li have been faring since COVID-19 hit, so we’re diving back into the business sector to look at what these programs are, how well they’ve worked and what local leaders say is still needed.

Available programs

While there are several financial assistance options for small businesses available, sources interviewed for this story agreed the most popular in the county are the Small Business Association’s (SBA) Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Emergency Advance (EIDL) and the local Ithaca/Tompkins County Small Business Resilience Fund (SBRF) and Emergency Relief Loan Program.

The PPP, according to the SBA, is a loan designed to provide a direct incentive for small businesses to keep their workers on payroll. The loans are forgivable if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage, interest or utilities.

“I was approved for that,” said Peter Parkes, owner of Benjamin Peters on the Commons. “I am paying my employees, so that certainly helps with payroll and also would help with utilities and rent.”

Parkes was fortunate in that he was able to benefit from the first round of funding. According to Forbes, the PPP initiative was originally funded with about $349 billion with the vision of loans being made until June 30, but just two weeks after launching on April 3, the money had run out.

The EIDL ran into similar problems. According to the SBA, the loan advance provides up to $10,000 ($1,000 per employee, up to 10) of economic relief to businesses that are currently experiencing temporary difficulties, but that application is currently closed due to lack of funds.

On April 23, the federal government approved the Paycheck Protection Program and Health Care Act, a smaller bill that authorized additional funding for PPP and EIDL, according to Tompkins County Area Development (TCAD).

The SBA resumed accepting PPP applications from participating lenders on Monday, April 27, according to the SBA.

Deirdre Kurzweil, owner of Sunny Days in Ithaca, used EIDL because she didn’t qualify for PPP.

“Even though my husband and I both work for the business, we don’t pay ourselves,” she said.

The local program SBRF helped to fill some of those gaps left by PPP and EIDL. SBRF represents the collaboration of local economic development agencies and community partners who created the fund and pledged $390,000 to capitalize it, according to the Tompkins County Chamber of Commerce.

Key contributors included the city of Ithaca, the Ithaca Urban Renewal Agency (IURA), Tompkins County Development Corporation (TCDC) and Cornell University, with support from the Downtown Ithaca Alliance (DIA), Tompkins Chamber, TCAD and Workforce Development Board.

Alternatives Federal Credit Union (AFCU) manages the intake and application process.

According to the city of Ithaca, the purpose of the fund is to provide forgivable loans in the amount of up to $5,000 for working capital to micro-enterprises and small businesses in Ithaca and Tompkins County experiencing hardship related to the COVID-19 pandemic.

“In our conversation with local small businesses, it became apparent that there would be a need for local funding,” said city of Ithaca Deputy Director for Economic Development Tom Knipe. “And we knew very early on that we wanted to structure it as a forgivable loan and that we wanted to target local small businesses and micro businesses that were directly impacted by closures.”

But like federal programs, the SBRF funds were short-lived. After launching on April 15, over 135 applications were submitted within the first 48 hours, an overwhelming demand that quickly closed the application window. The program was still well-received, though, said TCAD President Heather McDaniel.

“We got a really positive response,” she said. “Everyone, I think, has been really appreciative that we were able to put those together and to put it out on the street as fast as we did, recognizing that these businesses really need a lifeline right now until we know what recovery looks like.”

Coleen Foley, owner of Ithaca Community Acupuncture, was one such business owner who jumped at the chance to apply for SBRF.

“There weren’t a lot of strings attached to it,” she said. “We were really grateful for that one to come up because I really do feel like whoever sat around that table and figured that one out really had their pulse on small business.”

TCAD also recently launched its own Emergency Relief Loan Program to provide three-year term loans to traded sector businesses whose customers are regional or national in scope (businesses who primarily sell products or services outside Tompkins County).

While the state isn’t offering loan assistance programs like these, sources cited Unemployment Insurance and the Department of Labor’s Shared Work Program as other means of financial assistance. The Shared Work Program can help local businesses keep trained staff and avoid layoffs. The program allows employees to receive partial Unemployment Insurance benefits while working reduced hours.

Concerns and Challenges

As already alluded to, small business assistance programs like these haven’t been the ultimate solution some were hoping for. While many of those interviewed shared an appreciation for local programs like SBRF, they voiced several areas of concern with federal programs like a confusing application process, the stress associated with high demand and the funding simply not being enough.

Heather Healey, owner of Mighty Yoga in Ithaca, had problems with her applications for PPP and elsewhere.

“The process, and I’ve heard this from a lot of other people, was a little bit confusing and challenging to get all of the paperwork together, especially since I didn’t really feel like there was anybody I could ask, and if I did ask, I would have had to wait at least a day for an answer,” she said. “I didn’t feel like I could wait that long.”

Rochelle Layman, director at New York State Small Business Development Center (SBDC) at Binghamton University, said she’s heard similar complaints from the business owners she and others at SBDC have worked with.

“The folks that have applied for EIDL, they don’t know what the status is, so there doesn’t seem to be a mechanism to let the small business owner check the status of their application or even to see whether their applications don’t queue,” she said. “That’s very frustrating for the small businesses at this point.”

Gary Ferguson, executive director of the DIA, said it’s mostly a product of how quickly everything changed because of the epidemic.

“The sheer numbers of people who are on unemployment really is a challenge for everybody,” he said. “It has taken people sometimes weeks to get to the point where they’re even able to talk to somebody or figure out how to navigate to at least get an answer about what to do and how to do it.”

Tompkins Trust Company President and CEO Greg Hartz, who has helped many local businesses apply for these programs, said the unprecedented nature of the problem necessitated a quick response, but there were bound to be hiccups.

“The SBA were literally making the rules as they went along, and that made it very challenging for the banks to be able to administer a program with rules that were ever-changing,” Hartz said. “And that’s not really anybody’s fault.”

Even if businesses managed to figure out the application process for these programs, actually getting the funds was a challenge in and of itself. Healey, for example, shared her story of hearing the news of funds running out for the PPP.

“The thought of getting that is amazing,” she said. “I went from like, ‘OK, let’s get people back on payroll and get everything starting to ramp back up’ but then hearing that the funding ran out. I then had to shift to, ‘OK, we have to start pulling back because without that funding, we weren’t running sustainably.’”

And for those who got left out, it can be a mentally draining experience, said Kathleen Clark, director of business development at AFCU.

“That’s been super stressful for the business owners,” Clark said. “They feel like they’ve been shut out of programs, so they’re trying to balance that with the stress that they already have, and it’s stressful on us to try to help them through that as well.”

Jennifer Tavares, president of the Tompkins County Chamber of Commerce, said that the epidemic, not the SBA, is to blame for the high demand and quick shutdown of the federal programs.

“None of our systems are set up to handle this volume of applicants or to hand out this volume of money in such a short period of time,” Tavares said.

She added that the state’s Unemployment Insurance systems suffered from the same demand.

“Unemployment systems are being overwhelmed,” she said. “They’re just not used to seeing the volume of applicants that they’ve seen.”

Foley communicates with many local business owners, and she said she and others have applied for Unemployment Insurance and have yet to hear back.

“My husband filed for Unemployment Insurance about two a half weeks ago, and he has not gotten the phone call back that he was supposed to get once they rebooted the system,” she said. “That’s been a no-go for us.”

Another concern many voiced was the fact that loans are a short-term solution to what is and will continue to be a long-term problem.

“We are going to watch businesses slowly run out of cash,” Ferguson said. “And that’s a tough thing. Businesses continue to incur expenses and are not able to generate revenue, and you can only do that for so long before you run into real severe problems.”

Oron Cohen echoed that sentiment, saying that the loans can also become added expenses down the line.

“Coming and telling us that we can take loans is very nice, but loans need to be paid back. And if we don’t have work, how am I going to pay back loans?” she said. “At this moment, I’m not even considering what kind of loans I can take. … Right now, I’m not sure where the work will come from.”

Layman and others have heard similar stories from local business owners, and she shares their worries.

“I’m very concerned about the relaunching,” Layman said. “The small business owners, they operate at very small margins, meaning that there’s not very much money left at the end of the day. And this is a very, very taxing on our small business owners. So, I’m very concerned about the businesses that may not be able to reopen, or if they do reopen, they’re not going to be able to have a viable business to take them further.”

Parkes, like others interviewed for this story, expressed an appreciation for local efforts to alleviate some of these stressors.

“It’s quite a balancing act, but I think, between the city and DIA and the Chamber and the county, they’ve provided a lot of information and great information on their websites,” he said. “And anytime I’ve called somebody in those organizations, they’ve been able to answer my questions.”

What businesses can do

For business owners who have struggled with these and other challenges and haven’t been able to get the financial assistance they need, sources emphasized the importance of patience, persistence and preparedness.

“All of these funding programs are going to ask for generally the same financial information, so business owners have to anticipate that when something opens up, it’s going to be opened up for a very short amount of time,” Clark said. “And they can’t take up any time preparing their 2019 financials or those sorts of things; they’ve got to be ready to take advantage of the opportunity when it’s there.”

Layman said she’s seen how business owners often hesitate to ask for assistance, but that added help could be exactly what they need to get by.

“Small business owners are very independent people,” she said. “I would strongly suggest that they reach out to the organizations that are out there to help and to reach out to other small businesses so they could take more of a synergistic approach to solving the problems that they’re going to be having in the future.”

These local resources include organizations like the Tompkins Chamber, TCAD and DIA and financial institutions like AFCU, CFCU and Tompkins Trust Company.

“The Chamber is continuing to be a really a strong resource provider and a strong advocacy-oriented voice for our local business community,” Tavares said.

Chamber resources can be found at tompkinschamber.org and include webinars, information on different programs, funding opportunities and more.
The Chamber and DIA are also contributing to the new interactive website We Are Resilient (ithaca-business-ithacany.hub.arcgis.com). The city of Ithaca Office of Economic Development created the tool, which draws data from partners to create a database of local businesses adjusting their revenue sources and offering services during COVID-19 shutdowns. Those interested in being added to the database can contact the Chamber for more details.

Solutions and Strategies

While everyone interviewed for this story acknowledged this is a stressful situation for all those involved, many offered strategies for future practices and programs to help address some of the concerned outlined here.

“We’re hearing reports of where some of the initial round of PPP funding went to, which was to some very large businesses,” Clark said. “And we know firsthand of some of our local mom and pop shops that just weren’t even able to get applications, and I think those are the type of businesses we need to make sure that are taken care of and make sure that there’s funding specific for those small types of businesses.”

Knipe also referenced some groups that were left out of initial funding.

“We know from history that women- and minority-owned businesses don’t have equal access to traditional business financing,” he said. “And so, I think as we roll out these new COVID-19 programs, we need to make sure that women- and minority-owned businesses have access to those and micro businesses, businesses with five and under employees, that they have the ability to tap into some of these resources.”

Business owners interviewed for this story stressed the importance of funding sources that won’t need to be reimbursed later and add to expenses when they can finally reopen.

“It would be nice to see something that was a little bit more like disaster relief, no strings attached, forgivable, more like a grant rather than actual loans,” Foley said. “Disaster relief should not come with interest.”

Ferguson shared that viewpoint and added that future programs should be just as much dedicated to reducing expenses as providing financial assistance.

“The key here is, you really want your income and your expenses to match up,” he said. “And when you have no income and you only have expenses, they don’t match up at all. And so from a policy standpoint, that’s what you’re trying to do, is you’re trying to reduce those expenses as much as possible.”

Tavares and others agreed that addressing financial insecurity for businesses is going to take a lot of creativity and work.

“We’re going to have to work together and be strategic as we try to turn our minds towards recovery,” Tavares said. “It’s definitely a community-wide problem, and it’s a community-wide burden. I would certainly hope that as we make those plans, and as we move forward together, that we remember that we have to support our local businesses as much as ever before.”

McDaniel added that a future-centered approach is crucial to create solutions for the best recovery.

“We need to have some guidance on how we’re going to phase back our economy and how we’re going to do that in the in the health healthiest, safest way possible so that businesses can start to generate revenue to cover their expenses,” she said. “The longer this goes on, the more likely it is that a number of businesses are not going to come back.”
Hartz shared that sentiment.

“Much of what you’re seeing is a really good first step,” Hartz said. “I think that there are going to need to be some additional opportunities for businesses as they get restarted, as this economy begins to ramp up.”

Part of that support is more local programs like SBRF, Healey said.

“I was really thrilled to see that as an option, specifically for local businesses,” she said. “The opportunities from these massive government programs is great, but I feel like the local opportunities and local funding and local money that’s able to be raised is really what’s going to help sustain the local economy more effectively.”

Conclusion

The effects of COVID-19 have continued for accelerate, and as businesses continue to struggle for financial support during health safety shutdowns, programs aren’t able to keep up with demand. Programs were released so hastily and open for so little time that many business owners found themselves left out, and those that did get funding are still not out of the woods.

All that considered, though, sources said that through all this confusion, community support has been a source of optimism.

“I’ve actually been very inspired by our community’s response,” Knipe said. “Everywhere I turn, people are rolling up their sleeves, using whatever knowledge or resources or capacities that they have, to respond to the current crisis and then doing so in a way that’s really collaborative, and really creative. And because of that, I have very high hopes that we will be able to be resilient and come out of this as a stronger community.”

That work has not gone unnoticed, and it’s given people like Healey hope for the future.

“That’s been really helpful because we’re all in this together and we’re all in this place of uncertainty and a lot of unknowns together,” she said. “It can feel very isolating and lonely, even just running your own business in general, but especially at a time like this. So, I really appreciate all the work that they’ve done to bring us together.”

 

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