Will the CARES Act help keep companies afloat?
It goes without saying that many local businesses have been suffering since the novel coronavirus hit. Congress passed the Coronavirus Aid, Relief and Economy Security (CARES) Act to help. It includes low-interest loans and tax credits for small companies. But will it be enough for those who need it?
Since the pandemic forced most companies to shut down there has been a big increase in emails and phone calls to the Small Business Development Center at Buffalo State.
“We’re doing three to four times the volume we normally do,” said Susan McCartney, the center’s director, who said the shutdown has been extremely stressful for business owners who basically had to close overnight.
“Not only are they worried about their families and loved ones, as everyone is, but they're worried about their employees. They're worried tremendously about their financial obligations which are mounting up by the day. They're worried, will their customers be there when this ends? It is incredibly traumatic,” McCartney said.
After nearly 20 years of experience as a stylist, Monique Cole opened Mirror Emajez, a private hair salon off Maple Road near North Bailey in Amherst, just over a year ago. Cole shut down March 21 and says she has going through “hair withdrawl.”
“As far as the business goes, they actually suspended our rent. So that that's a blessing all by itself. Because if that's our only income and we can't work, how are we supposed to pay that? So that was a blessing for them to suspend the rent. But then when you have regular bills, you know, you have your at home rent and utilities and, you know, just basic needs, and you don't have the funds, to pay that either, it's a struggle. It’s definitely a struggle,” Cole said.
Cole filed for unemployment but she is still waiting to find out if she qualifies. She is also working with the Small Business Development Center and applied for a federal Economic Injury Disaster Loan (EIDL).
“When I originally applied, it was $10,000 right off. But then, they've been changing it as we go along. So, the update was, it's $1,000 per employee. So, if approved, I would only get $1,000,” Cole said.
Another option is the Payroll Protection Program. The PPP offers loans up to $10 million for small businesses under 500 employees, non-profits and the self-employed. Tom Anderson, a corporate attorney with Harter Secrest and Emery, says loan amounts are based on two-and-a-half times a company’s payroll costs.
“It’s somewhat amazing that if over an eight-week period the company that receives that loan uses it to pay 75% of that on payroll related expenses and the other 25% which you can use on other expenses, that loan will be forgiven by the government. So, if it’s used in the way that it’s intended, the money that’s received by the business it will never have to pay back. So, it’s quite an exceptional program coming from the government,” Anderson said.
Bob Phillips, president of Buffalo Hydraulic on Walden Avenue near Bailey Avenue in Buffalo, is also working with the Small Business Development Center.
“I've been here 40 years. I’m third generation. So I've seen even down times in the economy but I don't think anybody's seen a slowdown or the effects of what we're facing right now,” Phillips said.
Buffalo Hydraulic is small with five employees, but it’s unique. Phillips says the company designs and builds high-pressure, high-tonnage systems for lifting, pressing, pushing and pulling just about anything from bridges and trains to food processing equipment nationwide. It is considered an essential business.
“So we are allowed to legally work and we're doing so. It's just new business and what tomorrow looks like for us.” Phillips says not knowing if his customers will survive is stressful. He applied for an EIDL grant and the PPP, but he says his "big international bank" is overwhelmed with applications.
“There's really no follow up available to us. It's kind of a wait and see. Are funds available when they get to our application? We're not sure. So, we'll have to be hopeful in that,” Phillips said.
For help navigating the relief programs, McCartney says call the Small Business Development Center at SUNY Buffalo State.
“Our goal is to keep you alive, keep the business alive. To stay in that business, keep it going. Because we will get past this,” McCartney said.