Confusion reigns for owners seeking payroll funds
Laura Leigh Abby and her wife, Sam, had planned for contingencies.
Working with a mentor from the federal Small Business Administration, the couple outlined a financially conservative five-year plan before opening The Studio @ Beacon, a boxing and cycling gym, on Main Street in early 2018.
They knew that Beacon was a small city in the midst of big changes and expected a slow start. But as their clientele grew, the studio was on track two years into the plan. Then COVID-19 hit.
“You work for two years to build a business but you’re not thinking, ‘What are we going to do if there’s a pandemic?’ ” said Laura, who, along with the studio’s other instructors, was teaching 21 classes per week until Gov. Andrew Cuomo on March 16 ordered gyms, along with bars, restaurants and theaters, to close to slow the spread of the coronavirus.
The Abbys first applied for an SBA Debt Relief loan — they think.
“It’s link after link and you just click yourself into oblivion,” Laura said. “It was a lot of dead ends.”
They finally managed to submit an application but never received confirmation that it had been received. The next step was to apply for the Paycheck Protection Program.
While The Studio @ Beacon employs about 10 people, many are independent contractors, so the Abbys were initially unclear whether their payroll qualified for the program. They investigated deferring payments on the loan they took out to launch the business, as well.
As they searched for the program best suited for their situation, the clock kept ticking.
Instructors began posting workout routines on Instagram and, for a modest fee, through Zoom, but whatever money that brought in was only enough to pay the teachers.
“We’ve hosted those classes to keep people aware of what we’re doing, but we’re in crisis mode,” Laura said.
They’re not alone. Despite reports of billions in approved loans, numerous small-business owners in Beacon said this week that they’re still having trouble navigating the system.
Laeri Nast, who owns the Play toy store on Main Street, said he, too, is flabbergasted.
As soon as the shutdown began, Nast said he told his three employees that he would pay half their salaries while they stayed home.
“It would only be fair,” he said this week. “I didn’t know what anybody else was doing, but I didn’t want [my employees] to freak out. I wanted them to know they could eat.”
Nast said he called the SBA for guidance on getting a loan but kept getting disconnected after long holds. Aside from a few private orders for Easter gifts, Nast said he’s done little business in four weeks. “Amazon has us walloped” as far as online sales, he said. “I don’t know if I’ve played the cards right. Everybody that I’ve talked to — nobody seems to know.”
Program Suspended, for Now
On March 27, President Donald Trump signed the CARES Act, opening up $2 trillion in assistance to taxpayers, workers and small businesses through a variety of programs, including an initiative in which businesses can receive a loan for eight weeks of payroll, rent and utilities that will be forgiven if they don’t lay anyone off during that time.
As of Monday (April 13), more than 1 million Payroll Protection Program loans had been approved for $248 billion, according to the Small Business Administration, including 41,000 loans in New York State worth $11.7 billion. The average loan has been for $239,000, although 70 percent are for $150,000 or less. About 25 percent of the money has gone to the construction and manufacturing industries and 8.5 percent to retailers.
Banks say they have been inundated, and the American Bankers Association, a trade group, acknowledged on Tuesday (April 14) that the program had “encountered challenges from the beginning,” although the more than 4,600 banks administering the loans were told of the guidelines only days before the funding became available.
Nearly 300,000 JPMorgan Chase customers were “in some stage of the application process” to receive $36 billion in funds as of Tuesday, with more than $9 billion already sent to businesses that employ more than 700,000 people, a representative said on Thursday (April 16). Julia Berchou, an M&T Bank representative, said it continues to process applications “as quickly as possible.”
That same day, the SBA announced it would no longer accept applications for the Payroll Protection Program or Economic Injury Disaster Loans until Congress approves more funding.
As someone whose work relies on close proximity and physical touch, Beacon massage therapist Karen Meyer finds herself in the same boat.
“I know some therapists have other forms of revenue. They might teach or do something like reiki that they can offer online,” she said. “As far as I know, there’s nothing I can do that I could charge for.”
Meyer, a solo practitioner for the last five years, has applied for unemployment benefits, but like millions of other Americans, she found that process daunting. The state Department of Labor told her this week that her benefits are being temporarily withheld because of confusion regarding her income and self-employed status.
In the meantime, she has launched a GoFundMe page and applied for help through that company’s Small Business Relief Fund. Through a partnership with Yelp, QuickBooks, GoDaddy and Bill.com, the fund offers a one-time $500 grant for businesses that raise at least $500 on the platform.
“I’m not one for begging, but I don’t know how long I’m going to be out of work,” said Meyer.
Leonard Sparks contributed reporting. In the interest of disclosure, Highlands Current Inc., the nonprofit which publishes this newspaper, has applied for a Paycheck Protection Program loan but its application has not yet been approved.