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Small businesses left in the lurch as Paycheck Protection Program runs out of money

Posted at 4:06 PM, Apr 17, 2020
and last updated 2020-04-17 18:42:27-04

CUYAHOGA COUNTY, Ohio — The Paycheck Protection Program, the Small Business Administration's program intended to help small businesses by loaning them money to survive shutdowns due to the COVID-19 pandemic, ran out of money Thursday.

While there are talks on Capitol Hill of adding more money to the program, business owners who have been rejected because the program ran out of money are not sure what's next.

"It’s not business as usual, by any means," said Cecily Andrews, president of Quantum Age Collaborative.

Andrews runs a marketing firm that specializes in health care, mainly dealing with long-term care and assisted living facilities.

"Our clients are either providing long-term care services or they’re providing services to those care providers, so technology, furniture, what have you," Andrews said. "It’s been an interesting time for us because those who are in the care providing side of the business have their heads down, just trying to save lives and keeping people infection free."

For those clients, Andrews said, her firm has done some work in crisis communication preparation, "in case, God forbid, something should happen with one of their residents or a staff member."

But their day-to-day business has changed, and when it comes to technology companies trying to sell to nursing homes, "no one’s paying attention. As I said, they’ve got their heads down. They’re just in survival mode, trying to keep everybody alive and healthy."

Andrews hopes these changes are temporary. But she applied for the Paycheck Protection Program, hoping to keep her doors open and keep her employees busy, working and paid. She has two employees and several 1099 contractors.

Originally, Andrews hoped she'd be able to apply for money to keep all of them paid. But she said the program ended up not covering 1099 workers. Still, she applied, only to learn the SBA was out of money and the bank to which she applied wasn't going to process everything it had in the queue.

"They were very upfront about it and very forthright," Andrews said. "They were really transparent, but the money’s gone."

Andrews said she did not know of any local business owners who were going to receive PPP money, either. She described the situation as "very disappointing."

"There’s a part of me that feels foolish for believing it in the first place, because these are unprecedented times," Andrews said. "I really thought, 'Wow, OK, that would be wonderful if I just didn’t have to worry about that for at least a couple of months, while things hopefully get back to normal.'"

Sandi Donafee is in a similar situation. She's a hairstylist who also travels around the country doing hair extensions and teaching extension classes. She also rents space at Envision Salon in North Royalton.

She and her fellow hairstylists there tried to apply for the Paycheck Protection Program but were told it wasn't available to independent contractors until April 10.

"By the time that happened, they said there was no money, and then the bank that I bank with, they said they’re not accepting any more applications because they’re overwhelmed right now," Donafee, who used to own her own salon, said.

She said she has not looked for other jobs, since she is a cancer survivor and doesn't want to compromise her immune system.

Unemployment hasn't kicked in for her and her fellow stylists, either. She said the process has been confusing and wishes there was someone to help.

"I think it would be nice if we had somebody kind of guide us, you know," Donafee said. "Like when we call the SBA or we call someplace, they guide us into which direction to go."

For now, some small business owners are trying to figure out how to survive this, what they can cut to make ends meet and how long it'll take for things to go back to normal.

"In health care, we’re hoping we spring back quicker because it’s a needs-based business, it’s not luxury," Andrews said.

While Andrews knows there is a possibility that new money will be authorized for the Paycheck Protection Program, she's not sure if there will be enough money to go around.

"I just wonder how much money it would have to be, though, if not a single one of my friends in business here locally have seen anything yet," Andrews said. "I just can’t imagine the volume it would have to be to make everyone, to help everyone."

She hopes that there would be enough money to go around and give everyone "two and a half months' worth of payroll to keep everyone employed."

"If not, I would hope there’s some way to prioritize the businesses who need it the most," Andrews said. "Mine would not be one of them. I’ll scrap around and we’ll figure out a way. Because we’re based on so many 1099s it’ll be painful and we won’t be able to employ as many people, but we’ll be around. There are some businesses who without it are just toast."