Small businesses race to get financial help amid pandemic — but will it be enough to survive?

The COVID-19 pandemic has hit small businesses hard, from hair salons and restaurants to hotels and auto repair shops.

Sales and revenue have plunged, as Minnesota Gov. Tim Walz joined many other states in shutting down or restricting businesses and public gatherings to try to slow the spread of the coronavirus. Now, businesses are hoping federal, state and local loans and other aid may help them survive COVID-19.

At Lancer Service in St. Paul’s Lowertown neighborhood, auto repairs are down 60 percent. But to help keep the shop’s 11 employees on the payroll, owner Carl Thomas applied for and received a federal Paycheck Protection Plan loan, or PPP.

“So, we will be getting a little bit of a bump to take care of payroll and keep people on,” he said.

The PPP loans are forgiven if borrowers pay employees and meet other conditions. It took about 10 business days to get Thomas' loan approved, after a lot of upfront paperwork.

“Just the amount of time that we had to spend on that is incredible,” Thomas said.

The Small Business Administration announced last week that all funds allocated for paycheck loans had been spoken for. But Congress is expected to add more money to the program and other efforts to aid small business.

In Minnesota, about 46,000 paycheck loans worth $9 billion were approved as of last Thursday.

Andrew Hulse and his wife, Gay Bunch-Hulse, own the 18/8 men’s hair salons in Maple Grove and Wayzata. They have been approved for a paycheck protection loan. But they are trying to figure out what options they have for using the loan funds most efficiently with their 20 employees.

Ideally, the couple would start using the money a bit before they can reopen their salons — and during what would likely be the slow customer traffic weeks that could follow.

“Your funds are limited to two months’ worth of payroll,” Hulse said. “You want to be able to use the funds effectively so that when we get to the other side of this, the business itself isn’t on life support as we're trying to to get back to a more healthy economy,” he said.

Harshal Patel shares that concern about timing. He is president of Empire Hotels, which owns and manages the luMinn and other Twin Cities hotels. Occupancy rates are in the single digits.

“PPP is for payroll. But right now with no demand at the hotel, we really have no work for our employees,” he said. “We're going to take it day by day, try to figure out how we can hopefully utilize the program.”

Patel would like loan programs tweaked to give businesses more help with mortgages, utilities, taxes and other expenses before they’re ready to operate normally and have work for people to do. Otherwise, Patel says businesses may not survive to rehire workers.

Chuck Dougherty and his wife, Judy, got a paycheck loan, too. They operate the Water Street Inn and the Cover Park Manor Bed & Breakfast, both in Stillwater. They have already brought back 10 of the 50 people they would normally employ this time of year.

"I'm bringing a few employees back in and getting things organized for when we open,” Dougherty said. “But I'd like to get everybody back."

Dougherty would like to open now, but Minnesota's stay-at-home order runs through at least May 4.

Typically, small businesses are defined as those with fewer than 500 employees. And in Minnesota, there are 150,000 such establishments, with 2.1 million employees and a total payroll of about $100 billion.

So it’s not surprising there’s a lot of help for struggling companies, from the federal government, Small Business Administration, and state of Minnesota; business development organizations; and even cities like Minneapolis and St. Paul. It all adds up to hundreds of billions of dollars overall.

Minneapolis is offering no-interest and forgivable loans. St. Paul has a fund that will provide grants to qualifying families with children, as well as small businesses.

Many of the paycheck protection loans approved for Minnesota businesses went through St. Paul-based Bremer Bank. The lender approved about 3,200 SBA paycheck loans, totaling nearly $1.3 billion.

“The $1.3 billion in loans represents 146,000 employees,” said CEO Jeanne Crain. “And that's what we are focused on: how many people we’re impacting by being involved in this work.”

Bremer's loans have ranged from $3,000 to $10 million. Most loans are between $100,000 and $200,000. Bremer says loan processing took anywhere from several hours to days, depending on customer preparation and the speed with which the SBA completed its processing.

Applicants had to submit payroll records, tax filings, and income and expense documentation.

Bremer has about 1,500 applications in queue and hopes to submit them to the SBA if there's further funding of the PPP program.

Minnesota is trying to help, too. The state has a $30 million emergency loan program to assist businesses affected by Walz's order to close or restrict operations.

The maximum loan is $35,000. As of last Friday, the state had issued 367 loans worth $11.3 million. And there won't be enough money to cover all requests received so far.

“We have 23 lenders across the state who are working diligently to get that money out as quickly as possible,” said Kevin McKinnon, deputy commissioner of the Minnesota Department of Employment and Economic Development (DEED). The department is dispensing advice, too.

“The first step is talk to your banker. The second thing is: apply for the SBA resources that are out there,” McKinnon said.

Or resources that will hopefully return as Congress provides more money.

Meanwhile, McKinnon said DEED’s website has comprehensive information about help for small businesses. And DEED is providing advice and assistance through its nine regional small business development centers, as well as a network of organizations attuned to helping minority and really small businesses.

“Organizations like the African Development Center, the Latino Economic Development Center, the Metropolitan Economic Development Association," he said. "We have a number of lenders that are culturally based.”

Karl Benson, CEO of the Minnesota Black Chamber of Commerce, said some businesses are much better enabled to compete for help. He said very small businesses can’t afford accountants or attorneys who can offer valuable guidance at critical times like these.

“If you don't have a business CPA and a business lawyer, a lot of these things are just challenging,” he said. “It seems like a lot of our black-owned businesses and small entrepreneurs are the ones that are being pushed back simply because they don't have everything they need in the order that they need it.”

Benson said some chamber members with accountants and attorneys have received financial help. But he’d like to see funds set aside to help minority-owned firms.

Thousands of Minnesota businesses are still waiting to hear about loans. Steven Brown, the owner of Nothing But Hemp, is among them.

Revenue is down about 40 percent at his five Twin Cities shops and he has let go all but two of 18 employees. As of Friday, he hadn't heard anything about his loan applications.

“We're being hopeful,” he said. “But we really don't know if we're going to be able to get it, The PPP money has already been spent. And so if we haven't received it by this time … I'm assuming we have to wait for the next round of stimulus, if there's going to be anything such as that.”

Businesses people like Brown certainly hope there is. It may determine if they make it through the COVID-19 crisis.

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