Q&A: How Small Businesses Are Dealing With PPP, COVID

By Christina Haley O'Neal, posted Feb 4, 2021
The loan application process is ongoing for first-time and second-time borrowers in the SBA's Paycheck Protection Program until the end of March.

Businesses looking to take advantage of this latest round of funding could be part of as at least $15 billion in first-draw, and $25 billion in second-draw, PPP loans.

Many businesses in the Cape Fear region applied for and received loans when the process opened and closed last summer. 

Locally, Cape Fear Community College's Small Business Center (SBC) is one of many organizations trying to support local businesses through the COVID-19 pandemic and through the PPP process.

Jerry Coleman (right), director of CFCC's SBC, talks about the PPP process and challenges facing the small business community during the COVID-19 crisis.

GWBJ: Did the first round of PPP support any of the businesses the SBC has been working with?

COLEMAN: "We had a handful of SBC clients, not many, who managed to secure a PPP loan during the first round of funding. There was a great deal of confusion with the first rollout with a limited number of lenders participating, poor application guidance and the majority of funding going to larger wealthy organizations or large chains.

"As a result, the funds were quickly allocated within a few weeks, thus making it nearly impossible for our small businesses i.e., sole proprietors, mom and pop organizations, to get needed assistance. We had more clients receive assistance during round two (in June, when the federal government revised the program) as more funding, more lenders, and improved program guidance became available during 2020."

GWBJ: Were the PPP loans enough to help last year?

Coleman: "It helped, but it was not nearly enough for small businesses due to the immediate and recurring loss of revenue, the need for immediate assistance for rent, payroll, insurance premiums, and other basic expenses as a result of government-mandated restrictions/shutdowns which are ongoing.

"During “normal” times, approximately 50 % of U.S. small businesses only have enough cash on hand as a cushion to support operations with no incoming revenue for two weeks or less, and only 40% have enough for three weeks or more. The chart below reflects the dramatic impact on small business with revenue down on average 21%. For the hospitality tourism industry, revenue is down on average 47%."

GWBJ: Are any looking at taking advantage of this latest round?

Coleman: "Yes. We are about to cross the one-year mark with the pandemic. So, we have many small businesses looking to gain access to this new round of funding assistance, many for the first time."

GWBJ: Did we lose any businesses?

Coleman: "We have lost businesses, many in the hospitality and tourism industry. In particular, accommodations and food services. The industry is still facing hardship because businesses are operating with restricted occupancy requirements as mandated by the State of NC. Many restaurant owners that we have spoken with are reluctant to reopen dining rooms and are limited to offering curbside pick-up and delivery to protect staff and the public. Generally; across the nation, the accommodation and food services revenues are down a minimum of 36% or more given the location [according to IBISWorld, a market research firm].

"On average revenues are down on average, 47% as noted in the chart above. There are many other businesses that I speak with daily who have been hit hard as well i.e., (small retailers/boutiques, daycare facilities, youth activity organizations/daycare, nonprofit organizations, personal fitness organizations, yoga/massage therapy/ wellness salons/tattoo parlors, and many more), all continue to struggle. Bottom line; there is not one industry, but many who have been hit hard and continue to struggle as the crisis continues! Sadly, many are no longer in business. 

"Yelp released its Economic Impact Report from a survey it conducted with small business owners in August, revealing business closures across the U.S. are increasing as a result of the coronavirus pandemic’s economic toll."

GWBJ: What have been the challenges in this latest round of PPP for businesses? And how has the process been?

Coleman: "The challenges have been fewer as we have many lenders participating in support of the program. Also, businesses that received funding in rounds one or two are finding it much easier because the lender has much of the required information from the borrower. In addition, the eligibility requirements are geared for supporting smaller businesses including business in more economically disadvantaged communities providing them with priority access to PPP funding support."

More on the PPP loan process from businesses and lenders will be in Friday's cover story in the Feb. 5 issue of the Greater Wilmington Business Journal.
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