Business Deadline for Cheap Loans
By Dianne Anderson
Billions upon billions in funding are available from the government to help support small businesses with low-interest loans through the COVID-19 disaster economy.
Now the only thing needed is more time and more clarity.
Local business professional Vincent McCoy said that this stream of augmented COVID Economic Injury Disaster Loan (EIDL) funding looks to help certain neighborhoods and industries that suffered greatly suffered during the pandemic.
Restaurants, gyms, hotels, some hospitality and tourism, and other industries are targeted sectors, specifically the most hard hit, but the funding focus is not as far-reaching as the last round.
McCoy said the impact has been that fewer small businesses are either applying, or are being accepted.
He knows of some small businesses that received initial EIDL notifications from the Small Business Administration encouraging them to apply, but they were surprised when their application was rejected.
“There is more money available but it has proven to be a bit of a challenge for many small businesses because there are requirements,” said McCoy, vice-president of the Riverside County Black Chamber of Commerce. “Now you have to be in certain neighborhoods, and you have to demonstrate a 30% reduction in revenue during the [pandemic] period.”
Another hindrance is getting the Black and Brown businesses prepared for the funding and meeting tight time constraints. He feels many more small businesses that could have received funding will miss the opportunity, unable to handle the heavy application and submission process by the December 31 deadline.
Even for McCoy, former director of the Inland Empire Small Business Development Center, the process was demanding. For the average small business, the EIDL submissions may be difficult as each bank has a slightly different approach.
Small businesses that are not registered, or do not have their paperwork to go after the money also face greater hurdles.
In the past, many small business owners have asked him for help with EIDL or PPP application, but some lacked revenue documentation from 2019 to compare to 2020, or may have only recently started their business. Last year, when PPP rolled out in the western region SBA Region 9, some 70-80% of business applications were rejected, mostly due to paperwork errors.
“When you look at the Black and Brown community, we tend to have a greater preponderance of either inability or lack of experience or practice to properly fill out the paperwork. Or, we may not have the supporting documentation which allows us to be in a position to receive the funding,” McCoy said.
For the average small minority business, he feels more technical assistance is needed to ensure greater success.
Last year, he helped one Black-led nonprofit in Los Angeles County apply, which pulled down $563,000 in PPP funding. McCoy, a strategic consultant, had worked with the nonprofit, guiding him through the process.
“I said to him – you know you haven’t applied for this, and he was unaware that it was even a possibility,” said McCoy, who also holds his MBA in Marketing and Finance from Northeastern University.
McCoy has decades of background in helping businesses access government funding, and said that time around, the process was heavy. He spent a lot of time pulling together records, getting them in order, moving payroll records to quarterly monthly reports.
Still, because this is the first time that the nation has implemented a disaster program in all 50 states, he also feels it’s unrealistic to expect the SBA to have everything perfected.
“We need to shift some of the onus on to the business owners to be persistent and read the detail, take the time and get help and make sure to do it right.”
Over the past year, the chamber has been helping keep their businesses current, providing business assessments to see if they are ready to receive funds, and helping on a one-on-one basis to apply for funding.
But the clock is ticking.
He had received one November 19 release from SBA regarding COVID-19 EIDL, which officially ends December 31.
However, the SBA release also states the agency cannot continue to process supplemental targeted advance applications after December 31, and strongly encourages small businesses to apply by December 10 to ensure adequate processing time.
“It’s what drives people crazy,” he said. “A lot of small businesses are going to stop even though the deadline is 21 days later so it makes it confusing. The deadline is the 31st, but you have to apply by the 10th? The federal government [in] the last week of December, nobody is going to be working.”