Small businesses struggle to get PPP loans – Salisbury Post
By Natalie Anderson
SALISBURY – While paycheck protection program funds were able to help nearly 1,500 businesses in Rowan County and Kannapolis retain employees, the process was more difficult for small businesses than larger ones.
Last week, the US Small Business Administration, along with the US Treasury Department, released detailed information on the 4.9 million loans obtained under the program. The program was funded by the CARES Act Relief Program and included $ 350 billion in loans for businesses with 500 or fewer employees in the first round of funding as well as an additional $ 310 billion in the second wave.
Greg Alcorn, CEO of Salisbury-based Global Contact Services, said “we took our time to apply” due to the many changes, variables and modifications made throughout the process. Additionally, he said, the company wanted to make sure the initial rush was over before applying. The company retained 500 employees, including 10 in Salisbury and the remaining 490 in its call center in Long Island City, New York.
GCS was able to maintain its workforce in the meantime, and New York associates became work-from-home agents when New York City was “the zero point” for COVID-19 cases, said Alcorn. Agents were able to help other entities with a COVID-19 hotline and unemployment claims.
On June 11, GCS received between $ 5 million and $ 10 million in the second wave of P3 funding, and Alcorn said 100% of the funds were spent on salary expenses.
Some program rules and guidelines have been changed along the way, but at least 60% must be spent on salary expenses. Any remaining funds can be used for utilities, mortgages or rent.
Alcorn said the whole process was a “massive undertaking” as everyone involved was “wiring the house with the electricity on”.
Less than two weeks after the first wave of funds was made available to lenders on April 3, they were completely depleted. North Carolina Bankers Association president Peter Gwaltney said in April that banks were struggling to administer the funds because they had only received federal guidance the day before the money was made available.
But while the process was a challenge primarily for banks and lenders, some small businesses had a less than transparent experience.
Elia Gegorek, chair of the Rowan Chamber of Commerce Minority Business Council, said fewer resources to help small business owners made for a more difficult experience applying for and receiving funds, especially since many of them they relied on their accountants to help them with the process. . In addition, some minority-owned businesses, she said, are just a one-man business.
The SBA reported that 27% of the funds went to small businesses in low and moderate income areas. And the second round of funding included $ 310 billion in loans, of which $ 60 billion was earmarked for minority-owned businesses. The second wave was meant to be safer once lenders sorted out the issues, and steps were taken to ensure small businesses were the ones receiving federal relief.
Of the businesses that received less than $ 150,000 in Rowan County and Kannapolis, 27 loans were identified as female-owned and 129 were identified as male-owned. A total of 10 loans have been made to Asian business owners. Four were black. Four were Hispanic. In addition, 12 of these loans were for businesses owned by veterans.
But the SBA said nearly 75% of all loans nationwide were over $ 150,000. For companies that received less than that, their name and address was not disclosed in the data.
Pam Coffield, owner of Stitchin ‘Post Gifts, said she has encountered a lot of difficulty with the loan process, especially due to confusion over how exactly the program works. For a while, her bank believed she was supposed to work with her accountant, and the accountant believed she was supposed to work with the bank.
“Honestly, no one knew anything about how it worked,” she said.
Coffield was unable to fully support its eight-employee workforce until she received her loan. The store closed on March 30 and Coffield began the loan process. Then, she received the funds at the end of April. But some employees received unemployment benefits in the meantime while others took time off, which she said was “the time that employees needed the money from this loan to meet their wages. “.
She said the loan form appeared to be “designed” by the government. She had to complete another one after her initial application due to changes to the form.
Nonetheless, Coffield said it was a process that should be comprehensive and comprehensive if businesses are able to receive forgiveness.
Cyndie Mynatt, president of Ben Mynatt Buick, experienced a “seamless” lending process beyond the technological issues that everyone had to deal with. Within days of submitting the application in April, she received the money and was able to keep 55 full-time employees at the Salisbury site.
Mynatt said she used Uwharrie Bank, a community bank that was already an SBA approved lender. She is a board member, but said she didn’t believe her role on the board influenced her experience.
She and her son, Ward Childress, who were involved in the process, said they were trained by the National Automobiles Dealership Association as well as an auto dealership accountant, who “provided a lot of timely information” throughout. along the process.
About 75% of the funds were spent on payroll, and the rest was spent on rent, she said.
The money, she said, was a “send from God” because the dealers are commission based. So when the business collapsed, the company did its best to keep employees at their average salary, even though some jobs looked different.
Some employees took on maintenance projects, while many trainings kept employees busy because, although it was seen as an essential business, “no one was coming to buy a car,” Childress said.
The paycheck protection plan resumed accepting demands on July 6 in response to President Donald Trump signing extension legislation. The new deadline to apply for a loan is August 8.
Mynatt and Childress said they are encouraging small business owners to continue to apply for the remaining pool of funds. They encourage the use of an accountant “knowledgeable on this subject”.
Contact reporter Natalie Anderson at 704-797-4246.