How some small businesses have survived the Covid pandemic without them
The coffee shop of Mark Shriner, a small business in Lincoln, Nebraska.
Courtesy: Mark Shriner
Mark Shriner was in dire need of help. His coffee shop was closing in Lincoln, Nebraska due to the Covid-19 pandemic.
He sought federal assistance through the Paycheck Protection Program. This was designed to help small businesses stay afloat while the virus spread, and customers stayed at home.
All of his three requests were denied.
Shriner who runs The Coffee House downtown Lincoln said, “I tried everything.” “Everytime the government basically told my, ‘Tough luck honey,’
PPP loans were created to protect workers and offset the economic impact of the pandemic. Shriner’s was one example of a business that did not receive the assistance. They had to come up with creative solutions to survive in a situation that has disrupted entire industry models.
According to latest data, the program provided nearly 11 million loans totaling more than $790 Billion. It ended in May. dataThe U.S. Small Business Administration is the federal agency responsible for guaranteeing PPP loans that were approved by participating banks.
SBA stated that it did not have data about how many PPP loans were turned down. Shannon Giles, spokesperson for the SBA said that they do not know details about PPP loan disbursements and receive only certain information from lenders.
The Coffee House was able to continue its business operations despite being denied for PPP loans. CNBC also spoke with the owners of three other small businesses — a video game shop in New Jersey, an herbal co-op in Wisconsin and a spa in Colorado — that went through a similar ordeal.
They were able help their businesses to survive through other grant and loan programs, changing business models, community support, and selling their personal possessions. They are now ready to face the reality that the Covid pandemic will enter its third year, bringing a fresh wave of Covid cases. extremely contagious omicron variant.
Shriner explained, “We were able to weather any storms by innovating. We’ve also learned new ways of reaching our customers.” But it wasn’t just the employees, but also the support of the locals and those who came to work. We couldn’t have done without them.
President Joe Biden visits W.S. Jenks & Son, a Washington, D.C., hardware store that benefited from a Paycheck Protection Program loan, on March 9, 2021.
Mandel Ngan | AFP | Getty Images
In March 2020, Congress passed the PPP as part of its plan for the future. $2 trillion CARES ActThe program provided a rescue plan for many small-businesses during the pandemic. However, the program has been met with controversy.
After the initial PPP $350 billion allocation ran out in two weeks, public anger erupted. After the disclosure that large corporations had secured loans, scrutiny grew as thousands of small businesses were left out in the cold.
Shake Shack, automotive retailer AutoNationThe holding company Ruth’s Chris Steak HouseAccording to the report, they were one of the 440 public entities that received $1.39 Billion in PPP loans over the initial months of the pandemic. Securities and Exchange Commission filings data compiled by FactSquaredA political and media data company. The NBA’s Los Angeles Lakers were among other large organizations that have received loans.
Several companies were forced to close their doors amid pressure. returned a total of $436 million in PPP loansAccording to FactSquared, it is. The SBA is also available. issued new guidanceIt was less likely that aid would be granted to a public company that has substantial market value or access to capital markets.
nationwide Federal Reserve surveyBusinesses with less than 500 employees were found to have 20% of all non-employer business receive no PPP funding. According to a survey, 81% of small business owners in America are nonemployers. The survey also revealed that 44% of small businesses with at least one employee received no PPP funding.
PPP loans were also subject to fraud.
Covid-19 relief programs like the PPP have been a target of fraud and the Department of Justice is leading the charge. The department has already prosecuted over 150 people in more than 100 criminal cases. It also seized $75 million worth of fraudulently obtained PPP loans. it saidThis month, the Secret Service reported that it had received nearly $100 billion from a variety of Covid relief programs. December saw the U.S. Secret Service claim nearly $100 Billion from several Covid relief programs. This included PPP. had been stolen.
Small business owners, such as Ashlie Ordonez who applied for PPP assistance but was not granted any aid, were particularly disappointed by the program’s initial flaws.
Ordonez is the founder of The Bare Bar in Denver, and he said, “I feel so angry when the government kept denialing me when there was nothing comparable to these huge companies that received loans.”
Ashlie Ordonez is the founder of The Bare Bar Denver.
Source: Ashlie Ordonez
Just weeks prior to the World Health Organization, she signed a 4-year lease for The Bare Bar. declared the spread of Covid-19 to be a pandemicIn March 2020. Due to the crisis, May 2020 was pushed back for spa opening.
Her business was not able to start operations by February 15, 2020 which is the eligibility deadline for this program. Ordonez twice applied for PPP loans, but both times she was denied. The government denied her request. “Basically, he said that I did not suffer any losses” since the spa had no revenue prior to the eligibility date.
Ordonez stated that “It was pretty clear that I had been told that I understood that there was a pandemic and that therefore I should not have started a business.” She also said that it would be difficult for her to hire new staff in 2020. It was an insult to the face, because no one knew that business closings would take place for more than two weeks in February.
Heather Herdman has also twice applied for PPP loan. Because Sweet Willow Wellness was her herbal co-op she ran into an identical problem to Ordonez.
Herdman opened the De Pere storefront in Wisconsin in November 2019. This was three months prior to February’s eligibility deadline. Herdman claimed that her efforts to obtain PPP loans were unsuccessful because she could not prove economic loss.
Herdman explained that “I wasn’t qualified for any because I couldn’t write that we were closed for six weeks in 2019” and said, The application appeared to have been based solely on your 2019 data, however we were not open for long enough to allow me to see my 2019 and 2020 incomes.
Giles responded to questions about eligibility of business that were opened late 2019, or early 2020. The SBA spokeswoman said Giles is “administering” the law exactly as it was written. According to Giles, only those borrowers who were open by February’s eligibility date can get PPP loans.
Shriner, the Coffee House’s executive director, also claimed that PPP’s eligibility criteria prevented him from receiving loans of thousands of dollars.
According to him, it was just one box for the PPP applicationThe questioner asked whether any business, or one of its owners was “presently involved” in any bankruptcy. Shriner applied for Chapter 13 on December 13, 2018, after his divorce. He was still making court-ordered payments to debts, so he answered “yes”.
As a result, his applications were denied.
Shriner was turned down due to an SBA rule published in April 2020 This explicitly banned businesses with bankruptcy from taking part in the PPP. The SBA finally released the following statement after a series of legal cases were filed against these companies. new guidance a year laterBusinesses with court-approved bankruptcy plans were eligible to receive a PPP loan. Shriner had to have a Chapter 13 plan approved by the court in order to be eligible for a loan.
Shriner was informed about the guidance, and applied for a PPP Loan after it was approved. However, he claimed that the local bank still refused to lend him money.
Shriner admitted that “I tried, but couldn’t get past the Bank”, noting that this bank was responsible for the highest number of loans processed in his area. “I thought that I could have a shot.”
Side Scrollers’ owners, Adrienne Brandao & Justin Brandao
Source: Justin Brandao
Adrienne and Justin Brandao were among the small-business owners who said that they never received any response from PPP loans. After Side Scrollers closed its East Rutherford shop, a video gaming store, the couple applied for the PPP loan in the first round.
Justin Brandao declared, “We never heard any,” Although there was an additional round of funding, we were able to find other sources to help us.
Brandaos spent just a few thousand dollars before the outbreak. Duel Power trading cards were a product that they thought would bring enough business to last them for several months.
But the cards launched on the same day that Bergen County, which includes East Rutherford, went into lockdown, leaving the couple with no way to sell them — or for Side Scrollers to make any revenue at all.
The timing of the launch was terrible. Justin Brandao explained that they spent so much money for what was to be the best product of the season. Then everything went down.” “More than we could afford, we were just fumbling for cash.”
Square Capital provided two loans to the couple after they were not informed about their PPP requests. It lends money to small businesses using the payment processing services of its parent firm. BlockSquare, previously known as Square. Square Capital was formerly known as Square. It is not only an PPP lender but automatically takes a certain percentage of the daily cards sales from businesses until their loan amount is repaid. website.
Brandaos are close to paying off their second $6,500 loan. They have repaid the $4,000 initial loan. According to Justin Brandao, they have used the funds for high rents, utility bills, and Internet.
He said, “We needed to look for other ways to obtain money.” “And that was how we ended up really leaning upon the loan from our payments processor.”
Shriner was also the owner and operator of The Coffee House. He took two Square Capital loans after being rejected by PPP. Square Capital deducted roughly $200 to $300 from the cafe’s card sales each day to pay off $107,000 in loans.
Shriner stated that he borrowed the money to maintain The Coffee House’s limited operation and pay his staff for the initial year of the pandemic.
Sweet Willow Wellness owner Herdman is one example of a business owner who turned to another federal Covid program. She was denied by PPP but she applied twice and received a $3,000 economic injury disaster loan in April 2021.
In March 2020, the EIDL Program was created after the United States and territories were declared a Disaster Area by the Pandemic. The program provided low-interest funding to businesses to cover operating costs. According to SBA’s website, approximately 3.8 million loans with lower interest were approved. latest data.
Herdman explained that she used the loan to pay off her rents. These are the largest expense in Sweet Willow Wellness’s operation. She pays $350 each month extra to rent a commercial kitchen, which costs her $1700 per month.
Herdman received grants from Covid earlier in the pandemic. programIn partnership with De Pere, a local non-profit organization runs the program. To help businesses in De Pere fill any gaps left by federal programs, the program offers grants of up to $25,000 to qualified applicants.
Herdman claimed that she used the first grant for rent payment. It helped keep her afloat in times of low demand. To replenish Sweet Willow Wellness’ inventory of herbs, and teas, she used the second.
Herdman explained that at that moment in 2020 no one was coming into the house, which meant that he had to pay rent. “The grants were crucial in helping us through the first year during the pandemic. They saved my life.
Ordonez received no funds from any separate loan programs, which is a difference to other business owners. Elle stated that she was able to manage The Bare Bar and the staff by herself.
Her wedding ring was sold for $12,000, and she put all the money plus the stimulus money into the spa.
Ordonez stated that she just entered survival mode for a new company. Ordonez answered the question, “I don’t think that I would apply for loans or grants again.”
Many businesses were unable to operate as they would normally during the initial stages of the pandemic due to state-ordered shut downs or social distancing.
Some businesses were forced to adapt their business models in order to be more accessible to their customers. A 2020 surveyReleased by The UPS StoreThe study found that 41% (of the 500-plus businesses) “changed or pivot their businesses” within the first months after the pandemic. Around 65% of respondents said that they did more business online. 28% replied that they are shifting to ecommerce and 15% stated they offer curbside delivery.
Sweet Willow Wellness offered herbal products only when it opened its doors. Herdman, however, decided to get on board. delivery and curbside pickup crazeThis was after shopping and indoor eating became illegal during the pandemic.
Heather Herdman, founder of Sweet Willow Herbal Co-op.
Herdman increased the inventory of her co-op to include soups and fresh food products. These could be taken curbside, or ordered through an online service. GrubhubEatStreet. According to her, the new income source created by the expansion supported customers until they could actually shop in person.
Herdman stated, “The pandemic forced me to leap of faith in order to make that difference to what was offered. It sure did make an impact.”
Early in the pandemic, curbside pick-up was also initiated by the Brandaos. Justin Brandao worked tirelessly to develop a website for customers that allowed them to purchase products online, even though Side Scrollers had been closed for four months in 2020.
“That was the only method you could purchase stuff in our shop for some time,” he stated. That was definitely a good start to having that option.
In addition, the couple decided to host events remotely. The Brandaos claim that customers used to be able host parties for their children or take part in game tournaments before Covid-19. This was a core source of revenue for Side Scrollers.
Side Scrollers Lounge and Video Game Shop in East Rutherford New Jersey.
Source: Justin Brandao
The couple started hosting remote tournaments via Discord during the initial year of the pandemic. This gaming platform allows you to communicate by voice, text or video. Side Scrollers could expand their reach by holding remote tournaments that brought together people from all over the country, states, and even the United States.
They said, “Hey, look! My local game shop closed. I need to find somewhere else to play until everything is back up.” “I am from Texas.” “I am from Florida.” Justin Brandao added that we even had a man from Greece. The $5 tournament entry fee generated a good amount of revenue, which was sufficient to cover rent costs and other operating expenses.
Many small business owners also claimed that community support was what helped them to stay afloat even without PPP loans.
In March last year, Shriner created a GoFundMe account that “blew up.”
In the description, he wrote that any funds raised would be used to pay our 11 amazing staff members. He also noted that The Coffee House was not eligible for federal programs like PPP.
Shriner established a goal to raise $10,000. However, more than $23,000 was raised from 500 donors.
“It was incredible. It was amazing. Shriner stated, “I didn’t know that our community was so caring.”
Ordonez added that The Bare Bar was able to survive because it had the help of “normal people” and “kind-hearted strangers”.
Denver: The Bare Bar
Source: Ashlie Ordonez
Ordonez was contacted by a customer last year to speak with a journalist about The Bare Bar. New York Times storyInformation about small businesses. According to her, the publicity prompted individuals from across the U.S. and to send $15,000 of aid. This was critical for helping cover the rent and payroll costs.
“People from Florida, Seattle and California — everywhere. They began sending me money, and they said that they were willing to help. Ordonez stated that without them, my company would be closed right now.
These four small businesses are able to weather the hardships of the pandemic. The nationwide increase in cases due to the omicron strain has presented new challenges.
The Centers for Disease Control and Prevention declared omicron during the first week in January. made up 95% of all sequenced cases in the U.S.This is a significant increase from December’s beginning, when it was less than 1%.
This variant seems to have an impact on small business across the country. A third reported that sales decreased during the week ended January 9, according to the report. U.S. Census Small Business Pulse SurveyThe reflects changes in business conditions throughout the pandemic. This represents a 10 point increase from the 22% small business owners who experienced a decrease in sales over the week ended November 28, 2021. detected only in South Africa and a handful of other countries.
Sweet Willow Wellness was not affected by the variant. Herdman claimed that the business was “booming” with December sales “completely tripling.”
She said that January was a completely different story.
She said that business has been slow than usual in recent months. The co-op’s Saturdays are usually full, but it is quieter on that day since the New Year.
Herdman explained that more people are not comfortable shopping in the shop, leading to many customers turning to delivery and curbside pickup. Sweet Willow Wellness volunteers and customers have also tested positive.
Herdman stated, “I hear more people come in saying that they had it or their family members did.” We’re trying to be more careful about washing and masking, as well as all the rest.
Brandaos stated that, unlike Herdman’s claim, they have not noticed a change in their revenue or foot traffic since the spread of the omicron.
Sweet Willow Herbal Cooperative
“It has been fairly consistent in the past 2 months. “Revenue has fallen a bit in January but I don’t know if this is really due to Covid,” Justin Brandao explained, suggesting that holiday shoppers might have run out of spending money.
However, the new variant of the virus has caused problems. Side Scrollers were closed by Brandaos in December because a customer visited and tested positive for the virus.
Justin Brandao stated, “I’m not regretting the decision to close because I’d prefer not take that chance.”
Shriner stated that he’s noticed an increase in business over the past weeks due to more people being “spooked”. Two nearby offices made their Covid cases more prominent and had their staff work remotely. It has helped to reduce the amount of customers who could be interested in The Coffee House.
Shriner pointed out that students at the University of Nebraska-Lincoln are expected to make a return visit to campus in this month’s academic year, which will bring more revenue to his company.
The Bare Bar’s new model has “slowed everything down significantly” according to Ordonez. Customers are less inclined to get in-person services at the salon. Revenue dropped by around 30% between November and December.
Ordonez explained that once you feel good and like you’ve just made it through the forest, then something like this happens back. “We keep asking ourselves: When are we going get some relief?”