Small businesses wait for bailout loans as economic crisis deepens
NEW WINDSOR – Antonio Frontera received a disturbing sign when he called to verify his federal loan application to keep his specialty cupcake and cake business afloat: he was the 800 number in a line of anxious callers who were waiting at that time to speak to the small Business Administration.
About two and a half hours later, he reached an operator and got her no answer. Her loan application was on hold.
“It’s really sad,” said Frontera, whose six-year New Windsor-based company Antonio’s Cupcake Factory remains open during the shutdown that has shut down most businesses. “They say they’re going to do all of this for us, but where is it?”
In the United States, hundreds of thousands of business owners shattered by the coronavirus shutdown have seized bailout loans offered in Washington’s $ 2 trillion economic relief program to get them through an unprecedented crisis. But Frontera and others have found that the large number of employers seeking those same lifelines have slowed down at a breakneck pace the help they desperately need.
The legislation offered them two types of loans. The $ 349 billion paycheck protection program lends money for operating expenses that businesses won’t have to reimburse if they keep their employees at work. The package also added $ 10 billion to the existing disaster economic loan program and offered applicants $ 10,000 advances that do not have to repay.
Some $ 130 billion in payday loans had been approved as of Thursday, according to the Small Business Administration. Congress is debating adding an additional $ 250 billion to the program to meet the huge demand.
The National Federation of Independent Businesses reported Thursday that about 70 percent of small businesses in the United States have so far tried to apply for paycheck protection loans, and half have applied for disaster loans. .
Pamela Resch, owner of Pamela’s On the Hudson restaurant in Newburgh, applied for a disaster loan on the first possible day and was told she would hear about her $ 10,000 advance in three to five days. But that time passed without a response, and the polite SBA operator she contacted in Atlanta on Wednesday told her she might have to wait three weeks for approval.
This loan application in itself was easy, but maybe too easy, she said. No supporting documents concerning his company were requested.
Instead, she had to scan and send TD Bank about 250 pages of payroll records and other information to apply for a payday loan. That chore took an excruciating turn on Thursday when her online application crashed and disappeared due to the flood of loan applications, after Resch spent a few hours uploading documents.
Even though she gets this loan, she wonders how useful it will be for her. How can she rehire workers for her restaurant and catering business if both operations are closed for the foreseeable future? And why would these employees – up to 40 at peak hours – return to work if they can collect higher unemployment benefits?
Local interest in loan programs has been intense. More than 200 companies attended a webinar hosted on April 2 by the Orange County Industrial Development Agency to explain funding procedures. IDA has since helped companies complete 60 applications for both programs.
One of the first beneficiaries was Orange Packaging, a Newburgh-based company that continued to manufacture its food packaging during the shutdown and began making face shields for hospital staff in the area. Owner Mike Esposito said last week his application for a payday loan was swift and he hopes to get his advance within two weeks.
But a big hurdle for other businesses has been that smaller banks and regional banks have refused to take the risk of providing payday loans, or have limited eligibility to their existing customers.
Orange County IDA sent a letter last week to federal, state and local lawmakers in that region, urging them to push reluctant banks to grant loans and seek the regulatory changes banks need to participate. . “Local banks are unable to meet the demands of a struggling market,” wrote Laurie Villasuso, CEO of the agency.
Frontera requested both a disaster loan and a paycheck loan and received no response. He said he made do with a reduced crew and his fiancée, Cynthia Manhard, but lost orders for weddings, birthdays and holidays like Mother’s Day which made up the bulk of his business.
“Thank goodness I have a good loyal base, customers who have been coming for six years,” he said.
An agonizing aspect of the crisis is that his store was successful and he moved it to a larger location in September.
“We were doing so well until this happened,” Frontera said.