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Lowcountry businesses struggled with federal assistance process

15 mins read

S.C. SBA official: ‘There’s still money’ left in paycheck protection program

By Mindy Lucas

As new business owners, Kendell and Anthony Wilson thought they’d be dealing with the usual things business owners face when they opened their business Glowcountry Indoor Mini Golf in December.

Things like managing finances or marketing. Especially marketing.

After all, when Glowcountry first opened, the family-friendly golf course which uses black lights and glowing features was a new concept for most people.

“I’d love to say we came up with the idea but we didn’t,” said Kendell Wilson.

What the couple didn’t think they’d be dealing with was a global pandemic that would soon lead to a nationwide shut down.

“We were shocked,” she said describing those first few weeks. “You never expect the country to come to a complete close, to shut down.”

But shut down they did. And like many small businesses around the Lowcountry, the Wilsons soon found themselves looking to the federal government for emergency assistance and trying to decide if they even wanted to apply in the first place.

After all, they’d come this far without taking out loans.

“We literally put our savings into the business,” Wilson said, explaining the couple had even foregone building a house in order to launch their business venture.

“It was like, there’s no option to fail,” she said.

But this was something different, as everyone kept saying. And no one, not even those in Congress, which had just created a massive relief package, had ever seen anything like it.

So the Wilsons began looking into the process and reading online forms for clues as to what they might qualify for and that’s when the real headache began.

Enter the CARES act

Signed into law on March 27, the Coronavirus Aid, Relief, and Economic Security Act, or CARES, was designed to provide “fast and direct economic assistance for American workers, families and small businesses” as well as preserving jobs for American industries.

The $2 trillion package was like a lifeline to the drowning.

But the promise of relief was soon overshadowed by confusion and uncertainty as complaints began to mount from those who couldn’t get help from their own financial institutions tasked with making the loans.

Several area business owners did not want to go on the record for this article but aired frustration with their bank’s lack of assistance, nonetheless.

Then there was the application itself which many, including Bay Street retailer Nan Sutton, described as “unbelievably complicated.”

“You had to give them your whole life,” Sutton said, adding that if it hadn’t been for a business connection her husband knew – a banker who volunteered to help them – she might not have gone through the process at all.

As business owners across the country complained, there was confusion as to who was eligible, how much one could get in the way of a loan, what portion – if any – was forgivable, and which lenders were making the loans.

“I thought, I’m not going to deal with all this rigmarole,” Sutton said.

But in the end, uncertainty over the economy won out and, like many Lowcountry business owners, Sutton decided to go ahead with the process.

“I have never wanted to take money from anybody,” she said. “But I am going to take the money just in case Covid comes back.”

Sutton was certainly not alone in that regard.

As of June 6, over 59,000 loans, or $5.6 billion, had been approved for South Carolina businesses as part of the Paycheck Protection Program (PPP), according to the U.S. Treasury’s website. Another 14,000 loans, or $909 million, were approved through the Economic Injury Disaster Loan (EIDL).

But trying to get the money and waiting for any word as to the status of one’s application caused a great deal of frustration and anxiety for many area businesses just trying to make it through the week.

In fact, according to a recent member survey conducted by the Beaufort Regional Chamber of Commerce, some 83 percent of respondents had applied for assistance through the U.S. Small Business Administration (SBA) including the PPP and the EIDL program or both. Multiple members reported frustration and delays with processing those applications for loans or financial assistance.

After learning they didn’t qualify for the PPP since they had not been in business long enough to furnish a tax return, the Wilsons decided they would at least try for a loan through EIDL. So on April 1 they filed an application and then waited. And waited.

When Wilson tried to follow-up on the status of the application, they weren’t given any concrete answers.

“They would say, ‘you have to wait.’”

Meanwhile, rent came due and other bills began stacking up. Fortunately, their landlord was understanding and supportive of the new Beaufort-based business.

“Our landlord is amazing,” Wilson said. “If she had not been so understanding, we probably wouldn’t have been able to re-open.”

Wilson finally heard back on the status of their loan application toward the end of May – nine weeks after applying.

While the couple was approved for a low-interest, long-term loan they weren’t sure they were going take it.

“We are still deciding on the loan,” she said recently in an online message. Earlier she said if they did take the loan, they would use it to catch up on rent.

Sutton, whose banker connection helped process their application for a loan that eventually originated out of North Carolina, heard back about three weeks after submitting her paperwork for the PPP program.

She has also recently received one of the $10,000 grant-like loans that do not have to be paid back and an additional low-interest loan through EIDL.

While ultimately Sutton only took a fraction of the money she was approved for, she looks at it as an emergency fund and is not planning on touching the money if she doesn’t have to.

“We won’t know until the end of this year how the year went,” she said, adding she is just “hoping for the best.”

“I always try to remain positive, and I’m going to hope that Covid doesn’t come back in full force,” she said.

Asked about the frustration with wait times, William Furman, the U.S. Small Business Administration’s Charleston area Senior Manager, acknowledged the frustration and confusion many business owners had in the early going.

But he also said both the SBA and the banks were overwhelmed by the sheer volume of the customers they were serving and loans they were attempting to process. Often they too were in the dark about loan parameters and spent countless hours pouring over reports and guidelines posted on the treasury’s website.

“They were not structured to take on a pandemic,” he said. “It’s certainly been stressed to capacity.”

There was also criticism of the relief program in the early going after it was found that national chains and large, publicly traded companies had applied for and received millions of dollars from the loan program intended to help small businesses.

Many of these companies, that were found not to be in financial distress, received public backlash prompting some to return the money.

In the Charleston area, the Kiawah Island Community Association, a wealthy neighborhood group, initially received $1 million from the PPP, though after public criticism, it returned the loan.

Porter-Gaud, a private school in West Ashley, said they received a $3.6 million loan through the PPP along with Ashley Hall, an all-girls school in Charleston, which accepted a $2.2 million loan, The (Charleston) Post and Courier reported.

At least two other private schools, Charleston Day and Mason Preparatory, also received PPP loans, though both schools have declined to say how much they had taken, the newspaper reported.

It is unknown which, or if any, private institutions or large organizations in the Lowcountry received funding since that information isn’t currently being made available by the SBA.

Asked about the program’s criticism in terms of larger or wealthier businesses receiving the funding, Furman said that “all things considered” he thought the emergency relief process went well. He again pointed to the sheer size of the program and the way it rolled out over night to help those in need stay afloat.

“Normally it would take a few years to build something like this, and this was built in a few days,” he said. “Someone described it as being like they built the airplane while you were in flight.”

Lessons learned

Neither Sutton nor Wilson blame the SBA or any specific entity per se, for the programs’ initial problems. However, both said there were lessons to be learned.

“I think the government is going to learn a lot through this because they know what worked and what didn’t, and they are trying to adapt right?” Sutton said.

Furman agreed saying the programs were continuing to evolve and adjust.

Another bill signed into law on June 5, he noted, extended the time allotted for small businesses and other PPP loan recipients to spend the funds and still qualify for forgiveness of the loans.

Forgiveness calculations were originally based on the ability of business owners to spend the money within eight weeks after receiving the funds.

However, many businesses came forward to say this was nearly an impossible or unrealistic deadline to meet, depending on the size of the business or number of employees.

Also, the percentages of what businesses had to spend on payroll versus overhead have been changed as well to make it easier for businesses to adjust spending.

Furman also noted there was still money available through the PPP program and still time for businesses to apply, though the deadline is coming up fast – June 30.

And there are lessons for business owners as well.

“I will never take for granted another customer walking through my door,” Sutton said. “I will always try to be grateful because that was taken from us.”

Meanwhile at the newly re-opened Glowcountry Mini Golf, Wilson said she thinks there could have been more checks and balances as to who was getting the money early on.

“A lot of big businesses took advantage of that,” she said. “I wish that there wasn’t so much greed, that the big companies took everything and didn’t leave anything for the little guys who need it.”

She also wishes there had been additional options for businesses like hers that didn’t fall into any of the predefined categories set up for relief such as restaurants or tourism or were so new they weren’t eligible for the PPP.

“It happened so fast and there was so much money, no one was prepared for it,” she said. “Hopefully going forward we can learn from it and be a little prepared for it next time. And hopefully there isn’t a next time.” 

Glowcountry Indoor Mini Golf was one of numerous local businesses whose owners struggled with the federal govenment’s financial assistance programs.

 

 

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