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COVID-19 from the Small Business Owner’s Perspective

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(Mike Kemp/In Pictures via Getty Images)

When the powers that be announced the pandemic, all hell broke loose for a small family-owned architectural practice based in New York for over 20 years. Besides the “mom and pop” that run the business, they have two employees who work in a spacious home-based professional office.

The business didn’t know which way to turn.

Neither did anyone else in this service-based business field.

When all but “essential” businesses were shut-down, the owners didn’t know what qualified as an “essential business.” After googling it, they found only one resource, a report on a NY television station that stated, “CONSTRUCTION: Skilled tradesmen and professionals” were essential.

So we kept working.

In late March, the Fire Marshal came in and shut them down because someone complained they were open.

The business completed the application for the $10k grant (which turned out to be a $1,000 per employee grant). They wanted to complete a form for the Paycheck Protection Program, but there was no opportunity offered. The banks had no idea what was going on. The Small Business Administration’s website showed only the application for the grant.

Eventually, the business’s bank made an appointment. At the meeting, the banker directed them to fill the application online. This small firm had already completed the application online and submitted it. The online application gave no opportunity to review the answers to the questions nor gave a copy of the form or confirmation number.

“This process has become a big SNAFU, to put it as nicely as I can,” claims the wife of the business owner.

Here’s how the Paycheck Protection Program (aka PPP) works:

These steps are how this small family business figured out PPP.

You determine what your company’s average monthly wages are from the year before the commencement of the disaster. You multiply the average salaries by 2.5 to get your loan/grant amount. The final amount of your loan/grant must be used as follows: 75% minimum for payroll expenses. The 25% balance can only be used for non-payroll expenses, including rent or mortgage interest and utilities.

Nothing else.

If you use it as they require under those terms, it becomes a grant. If you use it for any purpose that violates those terms, it becomes a loan at 1% interest, and you have to pay it back over two years.

But here’s the trick:

The money must be used between May 1st and June 30th. You must put your employees back on your payroll and get them off unemployment as soon as you receive funding. Even if you can’t bring them back, as this small business in NY, until May 31st at a minimum. The business will pay the employees a full salary to sit home to do nothing. Meanwhile, the company is not allowed to do business.

To make it worse, the bank made a mistake on the loan documentation.

A big mistake.

The bank says to correct it with the SBA, and the SBA says to fix it at the bank. So now May 3rd has passed. No funding has disbursed for the PPP for this business. Will they be allowed to pay the employees retroactively when and if the company finally gets financed? Should they then return their unemployment?

“Your guess is as good as mine,” she continued.

Democrat governors whose states were in severe financial distress before the pandemic hit are now using the crisis to hold small business owners hostage. It appears they can extort federal bailouts for their states.

“It is for this reason, in my opinion,” she opines, “that these governors will not let us open up.”

Of course, all small businesses need to take precautions. No one is saying this crisis, or this virus isn’t real. Donald Trump said it best, though, when he said we cannot let the cure be worse than the disease.

 

 

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