As the number of daily coronavirus cases continue to grow, local businesses are preparing for extended or expanded restrictions that will affect their bottom line.
Unfortunately, it’s already too late for some. Kelly’s Restaurant and Lounge announced at the beginning of the month its last day of business was July 11.
“[It] was one of the hardest days in my ownership of Kelly’s as I had to inform my ‘family’ that we are permanently closing the restaurant,” owner Kelly Bauer wrote in an email to her customers. “As a business owner you always have an exit plan… this was not ours.”
According to Bauer, they were put in the unfortunate position of having invested in opening another restaurant when COVID-19 came crashing down, and federal Paycheck Protection Program loans couldn’t keep them afloat.
Sean McDonald is facing a similar situation — the Cole Street Brewery owner was just about to open a new bar on downtown Cole Street when Gov. Jay Inslee ordered all non-essential businesses closed.
“If there’s another shutdown, I don’t think I can survive,” he said in a recent interview.
His ire, likely shared with many other business owners on the Plateau, is that it seems a large majority the monetary aid coming from the federal government is going to employees, not employers.
“This PPP is in order to help the employees. But what’s to help the employer?” he continued. “At some point, the employer is going to fail, and then where are the employees?”
According to Kevin Grossman, a certified business adviser with the Green River College, there really aren’t a lot of options for small business owners to recoup what they’ve already lost.
There’s the PPP, of course, and under new rules, business owners can spend more of the loan on operating costs than before. When the program first started, employers were required to spend 75 percent of the loan on payroll, and the remaining 25 percent on other costs. Now, businesses can spend 60 percent of the loan on payroll, and 40 percent on other costs.
However, those requirements only need to be heeded if you want the loan forgiven — something most businesses would obviously prefer than having to pay back the loan, even with just 1 percent interest.
The loan program started accepting new loan applications on June 6, and plans to keep accepting applications until August or the pot of money runs out.
There’s also the Economic Injury Disaster Loan program, Grossman continued, which has different pros and cons than the PPP.
“It’s cheap money — it’s 3.75 percent rate,” he said. “But it is a loan, and you have to pay it back.”
EIDLs can be spent on operating costs, which includes paying off rent or even a mortgage. However, in the event of a mortgage, only the interest can be paid off, and not the principal.
The loan also can’t be used to pay off existing debt.
Grossman recommends any business owner apply for the PPP first, given that the loan will be forgiven if “simple guidelines” are followed, and then apply for an EIDL.
However, he warned that EIDL applicants need to think far ahead to make sure they don’t end up in a bigger mess than they are already in.
“If you don’t have a plan of attack for it, you’re still going to be in a world of hurt,” Grossman continued. “It’s a personal loan. You don’t just get to walk away from it.”
Unfortunately for McDonald, the money he’s received from the PPP and the EIDL programs doesn’t even cover his monthly utilities, let alone the months of rent he owes to his two landlords.
Normally, Grossman would recommend businesses like Cole Street Brewery to continue finding ways to cut costs and scale down services, but McDonald’s employees are already on unemployment and he’s the only one left still working in the bar.
At that point, Grossman said, one of your best options might be to just close.
“If you’re a really small business and you’re not making enough to cover rent and pay yourself, you might be better off just closing up and applying for unemployment under the CARES Act,” he said. Normally, unemployment doesn’t cover self-employed business owners, but the CARES Act gave Washington’s Employment Security Department funds to cover them.
It’s no longer about trying to make money, Grossman continued — it’s about mitigating your losses, “which is a painful way to look at it, but that’s the reality.”
That wasn’t an acceptable answer for McDonald.
“It makes you question, ‘why be a small business owner?’ It’s so much stress, and so much work,” he said. “That’s one of the American dreams — buy a house on your own, and start a business on your own. But now, everything is going against us. The government is just killing us.”
McDonald believes one of the best ways for people in his situation could receive aid is if the city of Enumclaw set up some sort of relief program using CARES Act money it will receive from the state, either by granting the money to business owners directly or by getting in contact with local landowners and pay them the rent their tenants owe.
The Courier-Herald previously reported the city of Enumclaw has received $366,000 in CARES Act funds, of which around $18,000 has been spent on the various outside dining spaces (or “streateries”) around downtown. The city plans to spend another $21,000 to extend tent rentals and to buy its own dining equipment, as what’s being used now is on loan from the Enumclaw Expo Center.
However, this was incorrect — in an email interview, Mayor Jan Molinaro said the city is eligible to receive up to $366,000 in reimbursement, and has already requested nearly $237,500 from the state for PPE costs, tech equipment to allow the city to continue to function, paid sick and family leave for public employees, meal deliveries to seniors, and small business grants.
The city can also receive another $18,500 reimbursement from the county, specifically for small business assistance — in this case, the streateries.
“The City Council has not given our administration any indication of using CARES funds for developing a SBA grant program for rent or utilities at this time,” Molinaro said. “It would seem that reimbursement for rent and utilities paid during a business closure period would be eligible. This might be worth exploring.”
The nonprofit Plateau Outreach Ministries already has grant system for rent and utilities in place, albeit for apartment renters, not businesses. When locals apply for aid, the organization gets in contact with landowners or utility companies and pays the bill via vouchers.
Unfortunately for business owners, POM Executive Director Elisha Smith-Marshall said the nonprofit is not set up for providing emergency assistance to small businesses.
The Green River College’s Small Business Center works to help small businesses with everything from start-ups that are writing their business plan and to succession and transition strategies for existing businesses — or, in the face of a pandemic, help small businesses find ways to survive an economic fallout.
Funding for the program comes from both the Small Business Administration, the national Small Business Development Centers, and local cities like Enumclaw, Kent, Maple Valley, and Covington, so that it’s always free for businesses.
More information about the Green River College’s Small Business Center can be found at www.greenriver.edu/students/academics/continuing-community-education/small-business-center/grow/; Grossman can be contacted directly at firstname.lastname@example.org or his office line at 253-520-6263.