Restaurants, charities lose out on federal payroll loans
Frustrated heads of charities and small businesses in Ventura County are reporting that they have been shut out of a federal loan program intended to help them survive the coronavirus pandemic.
The Small Business Administration program with $349 billion was depleted last week and critics have sued major banks, alleging that the institutions gave priority to businesses seeking large loan amounts. The Paycheck Protection Program provides loans for businesses to pay employees and overhead expenses such as rent during the crisis, but the loans are forgiven if the businesses keep their workforce and compensation levels.
Three-quarters of the loans were for amounts under $150,000. But an SBA report shows that 45% of the approved dollars went out in amounts of more than $1 million, feeding complaints that big companies were getting an unfair share.
In a story getting national play Monday, officials at the Shake Shack, a restaurant company with 189 locations, announced they were returning $10 million in loan money because they had secured other funding.
Variety of small businesses come away empty
Many who lost out in the local area were restaurants, small hotels and particularly small retailers, said Bruce Stenslie, CEO of the Economic Development Collaborative, which advocates for businesses in Ventura and Santa Barbara counties.
“There are 37,000 retail workers in Ventura County,” Stenslie said. “More than half work for businesses with fewer than 10 employees.”
He noted, though, that small businesses can include any firm with fewer than 500 employees.
Lyndsay Timpson, who with her husband, Pete, owns Pete’s Breakfast House in Ventura, said she could bring back 13 laid-off staff members if she could get the loan.
“The small person like us, the only way we can possibly hope to keep going is if we get that government help,” she said.
Four staff members had worked at the restaurant for more than 20 years, Timpson said. The couple and a son and daughter are filling in for the veteran staffers while the popular restaurant does the take-out business allowed under the virus shutdown.
Charities also hit hard
Charities were also hit hard, said Vanessa Bechtel, CEO of the Ventura County Community Foundation.
Bechtel said those loans can be a lifeline for local nonprofit agencies at a time when revenues are diminishing.
“Revenues for a number of nonprofits have completely gone away during this period of time,” she said.
The organizations are not doing the same level of work under government contracts, plus donations are dropping and events are drying up, she said.
“We have just moved into event season and every one has been canceled,” she said.
The impact of the virus on charities’ finances is at least five times greater than from the recent wildfires in Ventura County and the Borderline mass shooting, she said.
Both charities and small businesses are looking to the next wave of funding. A deal on a $300 billion relief package could be approved, USA Today reported.
The owner of Oak & Iron, a cocktail bar in Thousand Oaks, said he hoped to qualify for a loan after losing out on the first round.
Owner Andrew Pletcher said he didn’t even get a chance to apply the first time because the credit union where he banks was not prepared to accept applications. This time he expected that applications would be accepted Monday afternoon.
If he gets the loan, he could restore two part-time workers to full-time status and put two idled workers back to part-time hours.
“We want to take full advantage,” he said.