SALT LAKE CITY — In Utah, an estimated $3.84 billion from the federal Paycheck Protection and Economic Injury Disaster Loan programs has been approved for distribution to more than 32,000 companies, but some minority business owners feel shut out.
Marcus Jones, president of Miss Essie’s BBQ — a Murray-based catering company that produces smoked meats and barbecue sauces — said his business has been in a financial bind since the outbreak forced the shutdown of thousands of Utah establishments just over a month ago.
“It has been a nightmare,” said Jones, who is African American. “We filled out nine or 10 applications thinking that we were trying to get ahead of the game and come to find out the banks are overloaded with applicants. They’ve got 50,000 to 100,000 applicants in line waiting.”
The PPP allocations allow companies to have their loans forgiven if they use the funds specifically to cover payroll, benefits, rent and utilities.
He said to add insult to injury, he also hasn’t received an individual stimulus check, either.
“When the COVID-19 hit ... we didn’t have any money coming in for about a month-and-a-half, almost two months,” he said. While he has been able to adapt to some degree to keep his business afloat, the economic shortfall has been significant. And though he tried to apply early for federal loan assistance, thus far no help has been forthcoming.
At this point, he has lost faith in any of the federal government’s programs to address the financial hardship caused by the outbreak and is working to do the best he can to survive the crisis on his own.
“I will go ahead and do what I can do. I can only control what I can control,” he said. “But people are still out there spending money and shopping and things of that nature, then there’s got to be a route where I can get myself in there and make money and keep my business going.”
Sandy small business co-owner Steven Johnson has been similarly frustrated about being unable to get any financial help for his debt collection agency — Luke, Johnson & Lewis.
“We actually rely on people paying their bills to survive. So when you’re in a situation where people are calling you saying, ‘I can’t pay this month. I can’t I can’t do anything,’ you’ve got to do some type of special consideration for them,” Johnson explained. “But at the same time, you got to try to survive yourself.”
Ironically, he noted that early spring is typically when people tend to pay off their debts.
“This is usually one of the bigger times of the year for us because you’ve got tax returns coming back and a lot of people like to resolve their outstanding matters with those returns,” he said. “But we’ve seen the numbers drop as far as any resolutions on debts, any new enrollment of payment structure or any new settlements. It’s hit us hard, and numbers are skyrocketing as far as declining payments and actual payoffs.”
To make matters worse, he has also been unsuccessful in attempts to obtain help through the federal relief programs.
“Most of the small businesses in my immediate circle that I’ve spoken to haven’t received any of that money,” Johnson, who is also black, said. “It was a big runaround as far as how the rules in the game were changed as they went on, on how to apply for the money, secure the funds or even get in line for the funds.”
He believes the guidelines for the program were never fair from the beginning, particularly for minority enterprises.
“I think it was stacked against small business. I think there should have been some type of cut out,” he said. “When it all filtered down, there should have been a cutout for minority businesses.”
The Small Business Administration said determining the fairness of the loan distributions is a hard question to answer because too little data has been complied to make an accurate assessment of the programs so far.
“The real effort has been (to) get the program working, to get the money going out the door and make that is as smooth as possible,” said Chris Stever, deputy director for the Utah SBA district office. “The way the (Payroll Protection) program is structured, it’s pretty much first-come first-serve. It’s really on the lending institutions that facilitate the process because that’s just how the program works.”
He said the lending institutions take applications from small businesses and then submit them to SBA.
Stever acknowledged that some big companies have been returning monies received through the programs, but said SBA is unable to control how local lenders rank their applications.
“A lot of money lenders chose to prioritize existing customers over new customers, so those small businesses that didn’t have regular or strong relationships with those institutions had a harder time finding a lender to pick their application,” he said. “There was so much demand, it was so overwhelming that I’m not sure that you can say there were particular groups that suffered more than others or had a harder time accessing than others.”
U.S. Treasury Secretary Steven Mnuchin said the federal government would audit all companies borrowing more than $2 million from the SBA. The funds were approved by Congress to help small businesses with fewer than 500 employees withstand the COVID-19 emergency.
Utah Democratic U.S. Rep. Ben McAdams earlier this week called for higher transparency and accountability for the program, complaining that even members of Congress do not know who is getting the money in their states.
Meanwhile, a Utah minority advocacy group urged small businesses to make every effort to make stronger connections with the local SBA office and lenders.
“If you’ve already applied, follow up with your bank to see where you are in the queue,” said James Jackson III, executive director of the Utah Black Chamber. “If you haven’t applied, apply now because we anticipate this next round of funding is going to go fast.”
He also urged minority businesses to try to stay informed about the resources that are available look for help to access those funds.
“Build a relationship with a bank, get in contact with SBA reps. Reach out to the chambers, whether it’s the Black Chamber or the local city chamber because we have all the resources,” Jackson said. “Try to be at the front of this thing and just get your business and your name out there so when that next round of funding comes and your application comes in, they can recognize it. That’s important.”