BY BECCA LOUX AND ALEX HOEFT | Moonshine Ink
The first place Michelle Rahlves turned to when her business was designated as nonessential during the COVID-19 pandemic was Zoom, the video conference call app.
The Bar Effect owner wanted ways to keep her instructors employed, and teaching classes over video, though a distant second to live classes, “has been amazing,” Rahlves said during a Moonshine Ink Tahoe Talks with local small businesses.
The second issue she faced was money: “We are not using our studio,” she continued. “Our overhead is $5,000 a month. There’s no way we can pay that. Yes, I’ve applied for business loans, grants, and also the … [federal] $3 trillion bailout. So there’s applications for that as well.”
With literal shuttered doors, local small businesses are coming up short on monetary options to stay afloat during the current uncertainty. Thus, owners like Rahlves are seeking out grant and loan opportunities.
On a national scale, the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act — the bailout package Rahlves mentioned — is a step to assist several groups impacted by the pandemic, including small businesses.
The biggest takeaways for small businesses in relation to the CARES Act are emergency grants and loan forgiveness and relief.
To small businesses that have applied for Economic Injury Disaster Loans (EIDL), the Emergency EIDL Grants expedite capital to those businesses for up to $10,000 to cover immediate operating costs such as covered leave, maintaining payroll, and paying debt obligations. A total of $10 billion is available nationwide through this emergency grant program, which is lent out by the Small Business Administration.
(Kristin York, vice president of business innovation with Sierra Business Council, mentioned during a recent small business-focused webinar that those who applied for EIDL money before March 24 and haven’t heard from their bank or the SBA likely had their application lost “due to the SBA being overwhelmed.” York recommended reapplying immediately.)
The Payment Protection Program provides $350 billion in loans for eight weeks of assistance to small businesses (those with 500 employees or fewer, including independent contractors, self-employed individuals, and sole proprietors) and 501 (c)(3) nonprofits. Based on further clarifying information, we know that the $350 billion comes from the calculation of 2.5 times monthly payroll over eight weeks.
To apply for these funds, loans are made available through SBA-certified lenders, including banks, credit unions, and other financial institutions. In an effort to encourage the rehiring of laid-off employees due to the coronavirus crisis, borrowers will not be penalized for having reduced payrolls upon receipt of the loan. SBC’s York recommended applicants speak directly with their lenders for any specific questions or guidelines.
To those already utilizing loans from the SBA, $17 billion was set aside to allow a deferral of payments for six months.
The CARES Act also addresses those who have become unemployed in relation to the pandemic with the creation of the Temporary Pandemic Unemployment Assistance Program. This program, which extends through Dec. 31 of this year, expands unemployment benefits and adds $600 per week to each unemployment benefits recipient for up to four months.
Brittany Benesi, SBC’s government and community affairs director, provided an explanation of what this means for affected Californians: “Prior to the CARES Act, the average benefit in California is $450 a week, so in total, an unemployment recipient would receive about $1,050 per week moving forward. Traditionally, unemployment benefits are about 40% to 45% of a worker’s income.”
California is also providing small business options to those impacted by the COVID-19 crisis. For example, the California Small Business Loan Guarantee Program holds $50 million in state funding, and is meant for those who wouldn’t qualify for federal funding.
Under SBC’s umbrella lies the Sierra Small Business Development Center (Sierra SBDC), explained SBC president Steven Frisch in an email, “which provides technical assistance to small businesses and acts as the provider for Small Business Administration programs, including the Economic Injury Disaster Loan Program and the regular SBA program.”
The Sierra SBDC counseled 515 clients in 2019; this past March alone, the center saw 200 sign-ups.
Jessica Carr, the Sierra SBDC’s associate director wrote, “I probably speak to 15 or 20 people per day who don’t end up actually signing up because I answer their questions. We have recorded five webinars in the past two weeks (with others like TTCF and Nevada County) and partnered on or shared an additional seven.”
The two most-oft asked questions Carr is hearing from people are, What resources are available for me?, and How can I best assist my employees?
“Then, they want to know more about each program available and go … further in-depth about which one might work best given their specific financial situation and needs,” she wrote. “That’s where we come in — helping them figure out which is best (if any), or if they are able to pivot and get creative with cash flow instead.”
In addition to helping people understand how the CARES Act programs can apply to their businesses, the Sierra SBDC team also provides technical assistance in packaging the loan applications, marketing existing services, and working on cash flow strategies or pivots. Carr summarized their focus, which is to help businesses survive the declared economic disaster and plan ahead for the recovery.
Of course, the Tahoe/Truckee business community has always been creative, and many local businesses have found innovative ways to combat the economic effects of the coronavirus, or at least offset some of the losses incurred.
For example, Cottonwood Restaurant and The Pour House have shifted loosely into the area’s latest options for grocery items. In addition to offering takeout orders, these establishments have added produce, dairy, and even the highly coveted toilet paper for sale. It’s not just for laughs or profits either: By having less people needing to make trips to highly-trafficked grocery stores, these restaurants are all improving our efforts to deter the virus.
All up, SBC’s Carr is in contact with nearly 70 local businesses per day who are all being affected by the coronavirus pandemic. She said the types of businesses she’s speaking with “range from self-employed acupuncturists to service providers and restaurants, retail shops, and childcare centers.”
Small business development centers have been around for nearly four decades, but Carr said times of economic instability and crisis are their chance to shine.
“The Sierra SBDC is your community partner in surviving the COVID-19 hardships,” she finished. “From assisting businesses with the SBA Economic Injury loans to creative cash flow management to simply listening and problem-solving with you, navigating the new landscape for your employees, and digesting the federal legislation, we are here to help.”
Other local resources for small business owners, employers, and those unemployed due to the pandemic can turn to Placer County’s Business Resource Center. Nevada County also offers coronavirus guidance for businesses and employers. El Dorado County has its own COVID-specific industry resources. And in addition to Nevada’s statewide Business Information Network, which consolidates and simplifies COVID-19 information, is Washoe County’s regional business operations supplemental guide.
At a Glance: Resources to boost your business
IRS: On March 17, U.S. Treasury Secretary Steven Mnuchin announced in a press conference that the payment due date has been delayed by 90 days (to July 15) for individual taxpayers. This applies to federal tax up to $1 million owed with tax returns, which can apply to some individual-owned small businesses. No interest or penalties apply until after July 15.
Small Business Administration Economic Injury Disaster Loans are “designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the coronavirus (COVID-19),” the SBA’s site explains, up to $2 million. Once approved, these loans can be used “to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.” The interest rate is 3.75% for small businesses and 2.75% for nonprofits. The SBA is also accepting loan applications for up to $10,000 for COVID-19 relief from small business owners in all U.S. states [and] Washington D.C.
Additionally, the SBA provides debt relief to small businesses “as they overcome the challenges created by this health crisis,” SBA’s site states. Enhanced unemployment insurance and CARE stimulus package checks ($1,200 per individual) are also available.
Many private companies and tech giants are also stepping in to assist at this time. For example, Facebook is offering $3,000 grants, Verizon expanded its small business program, and Google has created a fund of $100 million to offer through grants and ad credits.
California is providing assistance to small business owners and employers impacted by COVID-19.
Nevada also has statewide information to assist businesses at this time through its Business Information Network.
Tahoe Truckee Community Foundation emergency resources: ttcf.net/non-prof/emergency-community-resources
Sierra Business Council COVID-19 relief: sierrasbdc.com
NLTRA business recovery resources: nltra.org/north-lake-tahoecovid-19-community-update/
Placer County business resources: placer.ca.gov/businessresources
Washoe County business resources: covid19washoe.com/businesses/
El Dorado County business resources: visit-eldorado.com/covid-19-industry-resources-for-el-dorado-county/
Nevada County business resources: mynevadacounty.com/2927/Coronavirus-Guidance-for-BusinessesEmplo