Small local businesses left in limbo after problems with PPP loans
CLEVELAND – A lifeline for millions of small businesses at the start of the pandemic, the paycheck protection program continued to leave many borrowers in limbo, waiting and wondering when their loans will be canceled by Small Business Administration.
Passed by Congress at the start of the pandemic, the Paycheck Protection Program, or PPP, has provided forgivable loans to 5.5 million small businesses nationwide, amounting to $ 555 billion, data shows most recent from the SBA. As many as 10,000 small businesses in Ohio have participated in the program, collectively borrowing more than $ 1 billion. As a condition of the program, loans would be forfeited if small businesses kept their employees on the payroll and used the funds to cover business-related expenses.
In October, the SBA released simplified forms for small business owners who received P3 loans under $ 50,000 – the bulk of borrowers – in an attempt to speed up the forgiveness process. However, many of these small business owners are still waiting for these loans to be canceled.
But some businesses, including in northeast Ohio, are waiting for help.
“I submitted right away because I wanted to make sure I stayed on top of everything. Then I didn’t hear anything,” said Angela Dudziak, general manager and co-owner of Neff Brothers RV in Lorain. “Then all of a sudden they wanted all this other stuff. Half, I don’t even get it.”
Dudziak’s RV rental and sales business came to a halt last spring as pandemic-related stay-at-home orders kept customers at home. Soon, events planned for the rest of the year were canceled and the company’s expected cash flow dried up.
“That’s when I said, ‘I have to apply for this,'” said Dudziak. “This is how we are going to get cash to survive as we were planning to reopen in May.”
Much like other small business owners who spoke to News 5, Dudziak said the PPP loan was nothing less than a lifeline. Her loan, which totaled just over $ 88,000, allowed her to bring back and maintain her staff of 15 full-time and part-time employees. The full staff was surely needed during the summer as people turned to their RVs for a well-deserved vacation.
“It was my lifeline for those six weeks. We couldn’t have opened it,” Dudziak said. “I couldn’t have put food on my employees’ tables if we hadn’t had this money.”
That firm belief in the PPP program – and how grateful she is for it – is part of the reason the past two months have been so frustrating, she said. At the beginning of December, she completed her application and submitted the necessary documents to obtain the cancellation of the PPP loan. Weeks later, she said communication and advice from the SBA was scarce.
“When you have a small business, every loan is another payment that month and that takes money out of your cash flow,” Dudziak said. “These are always scary things. It’s always in your head.”
Since the SBA began accepting loan cancellation requests – and a second round of PPP loans – some applicants have been hampered by technical issues, confusion over what documents are needed, and difficulty speaking with officials. the SBA.
John Kropf, executive director of Cleveland-based Growth Capital, said many of the 300 PPP loans processed by his company are still awaiting forgiveness approval. In the meantime, Growth Capital must service this debt. This does not include the overtime hours that his company has accumulated while trying to advance loan forgiveness requests.
“The longer it goes before these loans are repaid, the worse it is for us,” Kropf said. “Originally I planned to pay interest until July. A few months to get forgiveness after it was done or in September. Now we’re almost a year away. At first the SBA did a great job and I was very impressed. You can see the impact that has had on some of these companies. I think we’re seeing a downturn right now. “
Earlier this week, the American Bankers Association send a letter to the SBA and the United States Department of the Treasury to describe the problems applicants encountered when applying for either the second cycle of PPP loans or the cancellation of loans issued during the first cycle.
In a statement, an SBA spokesperson said the agency was working as quickly as possible to process the requests.
“The SBA remains focused on processing first and second draw PPP loans as well as PPP cancellation decisions as quickly as possible to ensure small businesses receive the economic help they need,” said the spokesperson. “Under the PPP Flexibility Act, lenders have up to 60 days to review PPP pardon requests and, in turn, the SBA has up to 90 days to make its pardon decision. In addition, PPP lenders must receive and process forgiveness payments. before PPP borrowers are notified.
The weeks of waiting left Giovanni DiLalla, owner of Cleveland-based American Copier Solutions, in a particularly precarious position. His business, which sells and services photocopiers for corporate clients in Northeast Ohio, has been particularly affected by the shift to employees working from home. DiLalla said he couldn’t make the tough business decisions necessary for the financial health of his business until he knew if his $ 166,000 PPP loan was canceled.
“Nobody wants to be in limbo like this. Whether it’s good news or bad news, whatever it is, the best thing to do is find out what the situation is, ”said DiLalla. “We are going through difficult times so we have to decide what to do. Even at one percent interest, paying back the amount I had is no easy task.
DiLalla’s loan allowed him to keep his 15 employees and his business afloat, which he launched in the 1980s.
“It was critical. I’m not the only one telling you that,” DiLalla said. “There’s no way we could have brought it back [our employees]. “
Although the past two months have been fraught with frustration, Kropf said the SBA issued new guidelines this week and appeared to have made progress in processing and remitting loans. Gil Goldberg, the district manager of the SBA’s field office in Cleveland has also personally reached out to borrowers for help.
“A lot of the people at the SBA have been as helpful as they can be,” Kropf said. “The SBA is still a big federal bureaucracy and everything it does is mired in the bureaucratic mindset. I think that’s what happened here in the pardon part. This bureaucracy is actually crushing. some small businesses. “