CHICAGO — Like countless small businesses across Chicago, Humboldt Park cafe and wine bar Cafe Marie-Jeanne is on the brink of collapse.
Mike Simmons, who runs the now-closed restaurant with his wife, Val Szafranski, said they have “very limited” cash reserves and fear they won’t be able to weather the coronavirus storm.
The federal government’s nearly $350 billion small business loan program offered a glimmer of hope. Simmons said the forgivable loan seemed like their “best bet” for survival.
“You’ll give me all of the money I need to pay my employees and to keep a little to run my business? That sounds perfect,” Simmons said.
But those hopes were shattered Thursday when the program officially ran out of money just two weeks after it launched.
Simmons said the news was made worse by the fact large companies like Ruth’s Chris steakhouse are getting a loan over him and other small business owners he knows.
“It feels like a herd culling,” he said. “Let the weak die out so that the strong can remain stronger.”
Small business owners across Chicago have been shut out of the Small Business Administration’s Paycheck Protection Program, commonly referred to as the PPP loan.
The program was launched as part of the $2 trillion federal stimulus package to help small businesses survive the coronavirus crisis. The loans are forgivable if used for payroll and other agreed-upon costs.
There’s a push to replenish the program, but it’s unclear if that will happen with congressional leaders and the Trump administration at an impasse.
Family-owned Chicago area trucking company Ave Services was hit hard by the coronavirus shutdown. Victor Gama, who runs the company with his father, said they were counting on the loan to get them through this crisis.
But they submitted their application two weeks ago and received only silence. Without a loan, they won’t be able to keep paying their 12 employees, Gama said.
“We were really excited when everything came out,” he said. “It hasn’t been what we thought it would be.”
Gama’s mother and father are Mexican immigrants who founded Ave Services nearly 20 years ago. The trucking company represents the American Dream, Gama said.
“They were able to send me to college with the money they were making. It’s their life’s work,” he said. “They’re having a hard time.”
‘We Don’t Matter To Them’
Over the past month, Logan Square-based accountant Nancy McClelland has been inundated with calls and emails from frantic small business owners desperate to secure loans.
“It’s been impossible to get back to everyone — there just aren’t enough hours in the day,” McClelland said in an email.
McClelland started offering free Q&A sessions and leading informational sessions with local groups like the Logan Square Chamber of Commerce to cut through the misinformation.
“There’s just so much misinformation out there caused by poor guidance, [regulations] that make no sense and some terribly written legislation that is so vague, it creates more questions than it answers. Add to that the panic everyone is feeling, and you get a lot of rumors,” she said.
Asked whether the loan has been a source of frustration among her clients, McClelland said, “I don’t mean to be rude, but this is an almost laughable question.”
McClelland said with the program running out of money, so many applications have been left “stranded” and now many businesses are on the brink of bankruptcy.
“I haven’t slept for two nights because of it,” she said.
McClelland said she’s prepared nearly 70 applications over the past few weeks and only three were approved for the program.
But even before the program ran out of funding, it was deeply flawed, McClelland said.
When the program was announced, an arms race erupted between the haves and have nots. Those who had access to resources — accountants, attorneys, reliable and trustworthy lenders — were able to get their applications filed early. Small business owners without those resources were left scrambling, trying to navigate the process with limited knowledge and means.
Bigger companies “used up the funding, leaving little left for those without the resources to apply immediately,” McClelland said.
Simmons, owner of Cafe Marie-Jeanne at 1001 N. California Ave., said he feels left behind.
“I think they’ve made it really clear on a national level that we don’t matter to them,” he said. “But maybe we can all eat a steak at Ruth’s Chris and talk about the good old days. F—ing kill me.”
Jenny Rossignuolo is the owner of Urban Source, a custom interior design and wallpaper shop at 1429 W. Chicago Ave. in West Town. Working with a lender at Chase Bank, Rossignuolo applied for a one of the program’s loan in the amount of $37,000 on April 8. She was optimistic about her timing; the deadline for applications was in June.
Like Simmons, she doesn’t understand why corporations like Ruth’s Chris, Shake Shack and Potbelly got loans when “mom and pop” shops didn’t. Shake Shack, following criticism, said it would return its $10 million loan.
“Business owners everywhere are struggling to navigate the current landscape while large corporations have a team of lawyers, accountants and financial professionals at the ready,” she said.
“While this program was put out with the idea of helping small business owners, it didn’t really reach the small business owners it was intended for.”
Of course, not all small business owners in Chicago have been shut out of the program.
Shayna Norwood, who runs a greeting card company and Logan Square retail store Steel Petal Press, was approved for one of the program’s loans.
Steel Petal Press has three full-time employees, including Norwood and about a half-dozen part-time employees. The stay at home order forced Norwood to close her shop in Logan Square, which accounted for 50 percent of her business. The other half of her revenue comes from manufacturing, but that’s in trouble, too: her retail clients nationwide are also closed.
With the help of her landlord, Norwood connected with a lender at Heartland Bank and Trust Company, who was able to create a bank account for her business and work with Norwood’s accountant on the application.
She found out last week her loan was approved.
“I was just lucky that I got hooked up with someone who could do it for me because of my landlord,” she said. “You need a certified small business bank lender to put in the application for you. … I would have been screwed if I had not been connected with someone already, [because] banks are not accepting new clients.”
The loan will cover Norwood’s payroll costs for 10 weeks. After that, she doesn’t know what will happen.
“I’m concerned people will say, ‘Oh, you got this grant money. You’re in the clear,’ which is so not the case at all,” she said. “The effects [of the shutdown] are still unknown. I want people to still feel inclined to continue to support the small businesses that make up the fabric of Chicago … . Even though there’s money coming in, the length and the gravity of this … . It’s still a hustle every single day, to keep work coming in, to keep employees having a paycheck.”
Other loans are being offered on the federal and local level, but the Paycheck Protection Program loan is particularly attractive because it’s essentially a grant if used correctly, Norwood said. If a business uses 75 percent or more of the money on payroll, it will not need to be repaid after 10 weeks.
If a business ends up using more than a quarter of the money on other expenses, it becomes a loan and requires repayment, Norwood said.
A traditional bank loan will need to be repaid — with interest. It’s the kind of strings-attached assistance many small business owners want to avoid, especially given this uncertain economy.
Naomi Levine is the owner of TipsySpace, a bakery and event venue at 1223 W. Grand Ave. in West Town. After the stay at home order forced Levine to cancel upcoming events and refund her clients, she pivoted her company to a full-time carryout business. She hired eight more staffers to help keep up with increased demand.
In what Levine described as a “catch-22,” her payroll costs have increased because she is operating — but because her landlord has refused to accept a discounted rent payment, she needs a loan to stay in business. She applied for but did not receive a Paycheck Protection Program loan.
Now that the federal government is out of money to give, Levine said she’s going to meet with her bank about a loan with interest. Even if she is able to access that capital to break even, she said, it’s going to be a long time before things stabilize.
“Small business owners don’t get a paycheck,” she said. “We rely on revenue for a business, and when it’s shut down and you have to recreate, there’s still no paycheck. There’s not going to be a paycheck for a long time.”
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