‘A completely different world’
Orlando’s small businesses are scrambling to get loans to stay afloat. But lenders are already overwhelmed.
On a normal Sunday morning, the brunch rush at Maxine’s on Shine is a flurry of servers carrying hot plates of fried green tomatoes and gravy-smothered biscuits, nimble bartenders concocting spicy Bloody Mary’s and fizzing mimosas, and the owner, Kirt Earhart, reciting one of his poetic ditties to a packed dining room.
But as the coronavirus spreads, Maxine’s on Shine, like most businesses, has been forced to scale back. Executive orders from the governor for restaurants to operate at half-capacity left Earhart with five tables. Another order to shut down dining rooms left just takeout and delivery. And now, the restaurant has closed completely, and Earhart has started selling his leftover inventory to make money.
“It was clear to see, even though we had a few people who wanted to come out to eat, there was no reason to chase pennies when it would take dollars to stay open,” Earhart said.
Now, with the chance of reopening seeming like a far-off fantasy, how long Maxine’s on Shine and Orlando’s other independent businesses can hold
on will depend on how quickly financial relief comes.
Small business owners in Central Florida are desperately looking to loans from the U.S. Small Business Administration, the Florida Department of Economic Opportunity and the Florida Small Business Development Center Network to stay afloat and continue paying staff.
Without that funding, Chris Hurn, CEO and founder of Fountainhead, one of the nation’s largest non-bank SBA lenders, estimates there will be hundreds of thousands, maybe millions, of businesses shut down permanently in the coming months.
Earhart is depending on getting a $50,000 emergency bridge loan and has applied for a $150,000 SBA loan.
But already, loan administers and lenders are buried by the avalanche of applications that have been submitted. The Small Business Administration said its offices “don’t have numbers at this time,” although some applications have already been approved. The Florida Department of Economic Opportunity did not immediately return requests about how many applications it’s received for bridge loans.
Hal Thayer, an assistant director with Florida SBDC, said the office inside the Orlando Fashion Square mall has received thousands of requests, and with only 40 employees, it is struggling to keep up.
“We’re overwhelmed,” Thayer said. “We’re doing everything we can, but the demand is beyond our resources. All of the systems we’re using right are trying to be adapted really quickly to this virus situation, but they were all built for threeor four-day hurricane situations. This is a completely different world.”
In less than a week, Hurn said his private lending office received more than 2,500 loan applications.
“We don’t see 2,500 loan submissions in 2½ years time,” he said.
One option for small businesses is an emergency bridge loan, a short-term payment designed to act as a stopgap until businesses can get other private or federal loans. The loans, for businesses with 100 employees or fewer, are interest-free for up to a year.
Gov. Ron DeSantis activated the program a few weeks ago so small businesses can “receive cash immediately.” But the $50 million allocated to the program could dry up quickly. If every business applies for and receives the typical $50,000 maximum, there would only be enough money for 1,000 businesses, compared with the more than 2 million operating in Florida.
Other longer-term loans are also available, including the Economic Injury Disaster Loan, a loan administered through the Small Business Administration that Florida businesses usually take out to cover property damage from hurricanes.
Those loans, available to businesses with 500 or fewer employees, sole proprietorships and independent contractors, go up to $2 million, but how much a business receives is based on “actual economic injury.” The loans span up to 30 years with fixed interest rates of 3.75% for for-profit companies and 2.75% for nonprofits.
Many business owners have reported problems with the SBA website, saying they can’t access the online application or are kicked off the site before they can finish it. Earhart said the only way he could get through was to fill out the application in the middle of the night.
Another option for small business owners is the Paycheck Protection Program, a forgivable loan program established as part of the $2.2 trillion emergency-aid package that Congress passed last week. The loans give up to $10 million so that businesses can keep on employees and cover payroll expenses. The program’s purpose is in part to prevent more Americans from losing their jobs as a record number of workers are being laid off or seeing their hours cut.
About 330,000 Floridians have filed for unemployment this month as of Monday, although that doesn’t include the countless number of suddenly out-of-work Floridians who have not yet been able to file claims because the state’s online portal keeps crashing and its phone lines are overwhelmed.
Companies can use the PPP loans for payroll and benefits expenses, rent and utilities and to pay interest on other previous debts. The loans are available to businesses with 500 or fewer employees, as well as hotels and restaurants with fewer than 500 workers at each site, even if they are owned by or affiliated with larger businesses. The loans are generally forgivable, meaning businesses won’t need to pay them back so long as any workers who were previously let go because of the virus are brought back by June 30.
Melissa Schumann, who owns The Falcon Bar & Gallery in Thornton Park, is still waiting back to hear back on the loans she’s applied for, including a $50,000 emergency bridge loan and an SBA loan. She’s nervous to miss a phone call in case it’s about her application.
“After a one-month period of being closed, I don’t know what I’ll do because I don’t have enough money after that. And I doubt I’m alone in that,” she said. “I’m just really hoping that some of these resources will pan out.”
The Falcon, normally a venue for small bands, open-mic nights, burlesque shows and a “drunk spelling bee”, has been closed since mid-March. Looking for any opportunity to save money, Schumann has cut
Wifi at the bar, worked out postponements and refunds with her vendors and sold about 90% of her leftover stock of craft beers and wines.
She’s also had to lay off her three bartenders. She plans to hire them back when the bar reopens and has raised $3,000 on GoFundMe to help them with their personal expenses.
“I feel horrible. Some of them, I’m not their only job. They have other jobs and they were laid off from those jobs as well,” she said. “I feel responsible for them. You know, I care about them, I want them to be able to pay their bills. They have car payments. They have rent.”
Earhart has so far managed to keep on his entire crew, about 19 people in total, although continuing to pay them while the restaurant is closed has nearly depleted what money he has left. He and his wife, Maxine, and the restaurant’s chef are forgoing their paychecks until the loans come through.
Parked outside his bank, where he had just closed the restaurant’s account to stop automatic payments, Earhart said he hopes he’ll be able to partially reopen soon with a delivery service and makeshift food market.
“I will make it through this,” he said. “There’s no doubt in my mind. I’m very calm, cool and collected that we will make it.”