CLEVELAND — A lifeline for millions of small businesses at the start of the pandemic, the Paycheck Protection Program has continued to leave many borrowers in a state of limbo, waiting and wondering when their loans will be forgiven by the Small Business Administration.
Passed by Congress at the start of the Pandemic, the Paycheck Protection Program, or PPP, provided forgivable loans to 5.5 million small businesses nationwide, amounting to $555 billion, according to the SBA's most recent data. As many as 10,000 small businesses in Ohio took part in the program, collectively borrowing more than $1 billion. As a condition of the program, the loans would be forgiven if the small businesses kept employees on payroll and used the funds to cover business-related expenses.
In October, the SBA released simplified forms for small business owners that received PPP loans under $50,000 -- the bulk of borrowers -- in an attempt to expedite the forgiveness process. However, many of those small business owners are still waiting for those loans to be forgiven.
But some businesses, including in Northeast Ohio, have been left waiting for assistance.
"I submitted right away because I wanted to make sure I stayed on top of everything. Then, I didn't hear anything," said Angela Dudziak, the general manager and co-owner of Neff Brothers RV in Lorain. "Then, all of the sudden, they wanted all of this other stuff. Half of it I don't even understand."
Dudziak's RV rental and sales business grinded to a halt last spring as the pandemic-related stay at home orders kept customers at home. Soon, events scheduled for the rest of the year were canceled and the business' expected cash flow dried up.
“That's when I said, 'I've got to apply for this,'" Dudziak said. "This is how we're going to get cash flow to survive because we were planning on re-opening in May."
Much like other small business owners that spoke with News 5, Dudziak said the PPP loan was nothing short of a lifeline. Her loan, which amounted to just over $88,000, allowed her to bring back and maintain her staff of 15 full and part time employees. The full staff was surely needed during the summer as people turned to her RVs for a much-needed vacation.
"It was my lifeline for those six weeks. We would not have been able to open," Dudziak said. "I would not have been able to put food on my employees' tables if we did not get that money."
That firm belief in the PPP program -- and how grateful she is for it -- is part of the reason the past two months have been so frustrating, she said. In early December, she completed her application and submitted the necessary paperwork to have the PPP loan forgiven. Weeks later, she said communication and guidance from the SBA has been sparse.
"When you have a small business, any loan is another payment that month and it takes money out of your cash flow," Dudziak said. "Those are always scary things. It's always on your mind."
Since the SBA began accepting applications for loan forgiveness -- and a second round of PPP loans -- some applicants have been hampered by technical glitches, confusion on what paperwork is needed as well as difficulties speaking with SBA officials.
John Kropf, the executive director of Cleveland-based Growth Capital, said many of the 300 PPP loans his firm processed are still waiting for forgiveness approval. In the meantime, Growth Capital has to service that debt. That doesn't include the extra hours of labor his firm has accumulated while trying to push the loan forgiveness applications along.
"The longer it goes before these loans are paid off, the worse it is for us," Kropf said. "I originally had this figured out to pay interest through July. A couple months to get the forgiveness after it was done or September. Now we're almost a year into this. In the beginning, the SBA did a great job and I was highly impressed. You can see the impact that it's had on some of these businesses. I think what we're witnessing right now is a regression to the mean."
Earlier this week, the American Bankers Association send a letter to the SBA and the U.S. Department of the Treasury to outline the issues that applicants have been experiencing while either applying for the second round of PPP loans or forgiveness on loans issued during the first round.
In a statement, an SBA spokesperson said the agency is working as quickly as possible to process the applications.
"The SBA remains focused on processing First Draw and Second Draw PPP loans as well as PPP forgiveness decisions, as expeditiously as possible to ensure small businesses receive the economic aid they need," the spokesperson said. "Per the PPP Flexibility Act, lenders have up to 60 days to review the PPP forgiveness applications and, in turn, the SBA has up to 90 days to issue its decision on forgiveness. Further, the PPP lenders must receive and process the forgiveness payments before PPP borrowers are notified of them."
The weeks of waiting have left Giovanni DiLalla, the owner of Cleveland-based American Copier Solutions, in an especially precarious position. His company, which sells and services copy machines for corporate clients across Northeast Ohio, has been hit especially hard by the shift to employees working from home. DiLalla said he cannot make the difficult business decisions necessary for his company's financial health until he learns whether his $166,000 PPP loan is forgiven.
“Nobody wants to be in limbo like that. Whether it's good news, bad news, whatever it is, the best thing is to know what the situation is,” DiLalla said. “We're in rough times so we have to decide what to do. Even at one percent interest, to repay the amount that I had is not a small task.”
DiLalla's loan allowed him to keep his 15 employees on payroll and his business, which he started in the 1980s, afloat.
"It was critical. I'm not the only one who will tell you that," DiLalla said. "There's no way we would have been able to bring back [our employees]."
Although the past two months have been fraught with frustration, Kropf said the SBA released new guidance this week and appeared to have made headway in loan processing and forgiveness. Gil Goldberg, the district director for SBA's Cleveland field office has also personally reached out to borrowers to assist them.
"A lot of the poeple at SBA has been as helpful as possible," Kropf said. "The SBA is still a large federal bureaucracy and everything they do is mired in the bureaucratic mindset. I think that's what's happened here in the forgiveness portion. That bureaucracy is actually crushing some small businesses."
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