Coronavirus

Paycheck Protection Program rollout leaves small businesses with questions

East Main Street in Streator looks vacant when it normally sees lots of traffic throughout the day.
East Main Street in Streator looks vacant when it normally sees lots of traffic throughout the day.

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A federal loan program intended to help small businesses has some entrepreneurs worried they'll be squeezed out by larger operations, while others have expressed an empathy for businesses of all sizes during the global COVID-19 pandemic.

The Paycheck Protection Program — part of the $2 trillion relief package signed into law last week — was billed as a way to help local businesses that often form the fabric of communities retain workers and pay bills. Businesses with fewer than 500 employees are eligible for the loan, which may be forgiven if all employees are kept on the payroll for eight weeks. But an expansive definition of “small business” in the law means that it was open to much more than just Main Street shops when lenders started processing applications Friday.

Operators of name-brand hotels, restaurants, service chains and franchises with thousands of employees at locations scattered across the U.S. are eligible. Lobbyists are pushing the Small Business Administration to interpret the law generously to help sectors devastated by mandatory business closures and stay-at-home orders, possibly making the aid available to international fast food and lodging giants and allowing individual owners to get around a $10 million cap on loans.

La Salle Business Association President Bart Hartauer said he doesn't mind if employers such as franchises are able to help their employees and bring them back to work.

"In time of need, I'm hoping anybody can get help. They've got to save jobs," Hartauer said. Still, he would not like to see small businesses that have zero to a dozen employees have difficulty reopening and bringing people back to work. "Even if it's a Kohl's store, I'd be fine with being able to (retain) jobs."

Hartauer said he has been so busy working with his insurance clients that he has not looked specifically at the Paycheck Protection Program. He noted that the business association's membership of more than 130 businesses ranges from independent stores to major employers such as the hospital in Peru and Illinois Cement (both of which are essential employers).

But what if you have no employees, as is the case for Monika Sudakov, owner of Chestnut Street Inn Bed and Breakfast in Sheffield in Bureau County?

"I'm an LLC, an owner and proprietor and I don't get paid like normal employees," she said.

Sudakov looked into the Paycheck Protection Program and thought it could be feasible for owners who have 10 employees or more.

She said the program's complicated, and she believed locally Midland States Bank was one of the few that has gotten involved in it.

"It doesn't seem to be well designed or thought out for really small businesses," Sudakov said.

Her plans include keeping the inn closed until there's an all-clear sign on COVID-19. For now, she thinks she'll be able stay afloat for two or three months without revenue.

Sudakov also believe a huge percentage of restaurants and small "non-essential" businesses will go under, as they may be operating month-to-month and need the steady cash flow. From her standpoint, even if she had one or two employees, she wouldn't know if it would be a good idea to enter some of the disaster-loan programs. She questions going into debt on a five-year $50,000 low-interest loan and then needing the business to recover enough to pay back $900 a month on a new loan.

Sudakov said she did apply to the Illinois Department of Commerce and Economic Opportunity for a $10,000 grant, but does not know if her unusual business — bed and breakfast and restaurant open for supper, by appointment — will be prioritized.

The Paycheck Protection Program is one of many relief programs that Illinois Valley Area Chamber of Commerce Executive Director Joni Hunt has been reminding member businesses about. IVAC members range from one-person businesses to 1,100-employee businesses, and she has been sending them all the internet links to all of the relief grant or loan applications that may be available and to determine whether they might qualify or receive priority if they get in line for aid.

"It's going to take some time to sift through these different options to assess what is best for their business," Hunt said.

From a wider perspective, she wants to see businesses thrive and people working again.

"I think the goal is that we come back stronger than we were before this pandemic," Hunt said.

Mary Olson, owner of Rock Paper Scissors game and toy store and co-owner of Prairie Fox Books in Ottawa, visited with her accountant Friday to determine which, if any, of the grant or low-interest loan relief programs would work for her.

Olson said she has seven employees during Christmas season but normally only three or four, and a Paycheck Protection Program loan would need to be paid back in two years. Olson said Ottawa Chamber of Commerce director Jeff Hettrick has kept member businesses informed about available programs, but owners remain confused about which ones are feasible for them.

Those who either aren’t eligible for or aren’t approved for a PPP loan should explore the handful of other federal, state and local aide options available to them, said Jim McConoughey, president of the McHenry County Economic Development Corporation. Most notable is the U.S. Small Business Association’s Economic Injury Disaster Loans and Emergency Economic Injury Grants, McConoughey said.

“That program allows you to apply directly to the SBA instead of going through a bank and allows you to borrow money, much like a homeowner might borrow money as a line of credit, and use that to feed the cost that might be associated with keeping your business afloat,” McConoughey said.

A more comprehensive list of resources available to small business owners affected by COVID-19 is available online at www.mchenrycountyedc.com.

Local chambers of commerce have been trying to get the word out about resources businesses have, and offer their own as well.

The chambers in Crystal Lake, Joliet and Sauk Valley, for example, update their websites regularly with information about COVID-19.

Kris Noble, executive director of the Sauk Valley Chamber of Commerce, said their job has been to be the gatherer of information and bring together people. Though they are a small, rural organization, she said they have been in touch with local, state and federal authorities, the Small Business Administration, United States Chamber of Commerce, Illinois Chamber of Commerce, and federal and state legislators.

“That's been very beneficial,” Noble said. “We've been spending every day in the past two weeks just making these connections and throwing out as many resources, grants, loans, connections as we can possibly find, and getting people to connect to each other.”

Like Noble, the Joliet Chamber of Commerce also has fielded questions from business owners about loan qualifications and which services have been classified as "essential."

As people learned about the next source of funding, through the CARES Act and the Paycheck Protection Program, their focus began to shift, said Mike Paone, vice president of government affairs at the Joliet Chamber of Commerce.

While Congress could approve more money later on, the program as it stands is expected to run out quickly. That could mean applicants who have the financial and legal expertise of a larger organization might be able to maximize their benefits, not leaving much for smaller businesses, especially those who wait or have problems applying.

“The saying is, ‘You always try and use all the tools in the tool belt,’” Paone said.

• The Associated Press contirbuted to this report.

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