Small business owners not getting hopes up
Program to receive $322B, but funds are expected to run out in days
WASHINGTON — Weeks after Jim Battles applied for a federal loan to keep his Spring welding and laser-cutting business afloat, he’s still waiting for a response. Battles had to lay off one of his three employees at B.A. Southern Welding and Laserworks and says his family is living off ramen noodles as his contracts dry up.
“I was a successful business owner, and now I can’t afford to put gas in my truck,” Battles said. “A lifetime of work getting flushed down the drain, and all we needed was that stupid loan.”
Battles, 42, was one of many small business owners across Texas left hanging as the federal government’s $349 billion Paycheck Protection Program ran dry just two weeks after it opened. The program provides loans of up to $10 million that can be forgiven if 75 percent of the proceeds go toward keeping workers on the payroll and paying eight weeks of wages.
Lawmakers hope the next batch of paycheck protection loans — $322 billion more that Congress approved on Thursday — will get more help to those most in need. The new round of loans sets aside $60 billion for smaller lenders, which they hope will reach smaller and minority-owned businesses that missed out last time.
Smaller shops like Battles’ have had difficulty navigating the application process with little, if any, guidance as businesses with inhouse accountants and close relationships to banks swiftly gobbled up the first batch of funding.
Recipients ranged from local architecture firms to fast-food chains, including San Antonio-based Taco Cabana, and publicly traded companies worth more than $100 million.
‘Not very hopeful’
And with many applications already lined up by banks working with customers from the last round, and several large lenders such as Wells Fargo and Chase — who were unprepared for the massive wave of requests in the first round — now ready for the second, it’s likely many business owners will find themselves in the same position this time. Some expect the new funding to dry up in a matter of days.
“The way things have been going, I’m not very hopeful with it at all,” Battles said. “There’s a glimmer of hope, but I’m not getting my hopes up, that’s for sure.”
By the time the initial batch ran out of money, $28.5 billion in loans had been approved for 134,737 Texas businesses, according to Small Business Administration data. That was the second most of any state in the nation, yet only a fraction of the eligible businesses in Texas received the loans.
The state has more than 546,000 businesses that could have qualified, according to the most recent data from the Texas Workforce Commission.
The new $428 billion relief package passed by the House includes $75 billion in new funding for hospitals and $25 billion for coronavirus testing, $11 billion of which is meant to help state and local governments boost testing capacity.
It’s the fourth spending deal Congress has reached in recent weeks — totaling some $2.5 trillion — as lawmakers try to curb the spread of the coronavirus and stem its economic damage. No member from Texas opposed the measure.
The bill passed the Senate on Tuesday and is expected to be signed by President Donald Trump soon.
Republicans had pushed to add money to the program swiftly last week, but Democrats demanded the deal include additional funding for hospitals, as well as some funding specifically for smaller lenders. Republicans were still fuming at the delay as the deal sailed through the House a week later.
“How many jobs could we have saved if partisan politics had not reared its ugly head?” U.S. Rep. Kevin Brady, a Republican from The Woodlands, said on the House floor.
Democrats said the program needed to be fixed, as it clearly wasn’t reaching the businesses in the greatest need. U.S. Rep. Joaquin Castro of San Antonio, who leads the Congressional Hispanic Caucus, had pushed to set aside billions targeted toward small and minority-owned businesses. In the end, the package included $30 billion for community-based lenders, including minority-owned banks, microlenders and credit unions and banks with assets under $10 billion.
Another $30 billion is reserved for credit unions and banks with assets between $10 billion and $50 billion.
Castro said it’s still not enough.
“Over 90 percent of banks have under $10 billion in assets, so there will be major competition for the set-aside pot of money, which is already not nearly enough to meet the need,” he said. “Big corporations should have never taken money intended for real small businesses in the first place, while local familyowned restaurants had to struggle to hang on.”
Oversight committee
The House on Thursday also created a new committee to investigate the Trump administration’s handling of the trillions in coronavirus relief funding Congress has approved, a move opposed by House Republicans.
“It is to save lives and to make sure that we can focus on the needs of those like the elderly in nursing homes, who need to be tested, or essential workers or we find out the underlying incompetence, if you will, of large companies getting monies from the mom and pop businesses,” U.S. Rep. Sheila Jackson Lee, a Houston Democrat, said on the House floor. “That needs oversight.”
Whether this next batch will make it to business owners like Battles is another matter. He didn’t know how to apply the first time, and said he was directed to the Small Business Administration website where he found an application for a paycheck protection loan, as well as an emergency loan.
He didn’t hear back and called a 24-hour SBA hotline a few days later. He was told to fill out the application and submit it again, so he did. That was on April 2.
“I’m just totally confused and just disillusioned,” Battles said. “They talk all this crap for over a month about helping small businesses. … My whole life is going up in the flames.”
Battles said several of his most lucrative contracts have dried up. He’s still getting sporadic requests for laser work, but “it’s just barely enough to keep me busy. It’s not enough to sustain our livelihood whatsoever.”
“I had three employees. I had them depending on me,” Battles said. “I’ve still got three kids at home who are 12 and under. We’re eating ramen freaking noodles for every meal now.”