The scramble for small business loans goes on

Timing and relationships have been key to the success of several local small businesses that received loans in the first round of funding from the federal Paycheck Protection Program (PPP). The $350 billion fund dried up within days, leaving some businesses empty handed and hoping to get a piece of the $310 billion second round of funding that is funneled through lending institutions.

"It's been a chaotic process for everyone," said Kate Head of Pebble Jewelry. She got on the phone with her bank early and leaned on people there to make sure she did everything right. Even then, she said she spent several days dealing with technical issues during the application process. But it was worth it. She got a check that will keep her making and selling jewelry in Niwot. "It's critical. It's giving us time to get our online shop open," said Head.

Now she's worried about the fine print. There are specific requirements that will allow the loans to be forgiven, otherwise businesses will be on the hook to pay the money back, though it will be at a low interest rate. Head is a sole proprietor, but she still needs to make sure the payroll and expenses are documented correctly. She's grateful that First National Bank of Omaha is keeping her informed about what she needs to do going forward.

A caring bank employee made all the difference for Michael Tomich of Old Oak Coffeehouse in Niwot. He met with Mutriba Shareem of Chase Bank who gave him a personal point of contact. Tomich put his application in early, but said he was losing hope until Shareem reached out.

"The day that the fund was running dry, she called me to just check in and let me know that another of her customers had received a loan a few days earlier. She assumed that we had too. I told her we had, in fact, heard nothing. She took my confirmation number, and I received notification that night, after the fund had been depleted, that we had received funding," said Tomich. "It is my opinion that she is directly responsible for us getting our loan simply because she cared enough to check in and was a thorough employee. What luck."

Tomich recently received the loan money, allowing him to stay in business for at least another couple of months. He's expanding hours and bringing back spaghetti Saturday for to-go orders starting on May 4. "We would have been closed had it not been for her or the funding," he said.

Bruce Warren, an attorney at the Niwot law firm Warren, Carlson & Moore, LLP, got support and funding from the bank he's used for 45 years. "Having that relationship was important and 1STBank of Gunbarrel did a really good job of processing our application," he said. "My partner, Tom Moore, got our application in as soon as it was available, and worked with Conner Travis at the bank to get it approved."

Warren said many of his firm's clients are other small businesses that are struggling. Many aren't in a position to spend money on legal services, and litigation is on hold as the courts postpone civil cases. But he is seeing an increase in estate planning work during the pandemic. "More people are paying attention to thinking about their wills and medical powers of attorney," said Warren.

Although the workload is still down somewhat, it's starting to come back. Warren said the office would have had to consider cutting staff hours without the loan. It also allowed the firm to keep two part-time high school students on the payroll along with the full-time staff.

Warren said the purpose of the PPP program is to keep small businesses afloat, and he and other members of the firm are buying takeout lunch at local restaurants every day. "We want those businesses to get some of the benefit of our PPP funding," he said.

One business that did not get funding is this newspaper, the "Left Hand Valley Courier", which saw a sharp drop in advertising revenue when the economy closed. Warren is one of the five local owners, which has had to go to an online subscription format to survive.

Warren said there was confusion about the PPP loan eligibility of businesses such as the "Courier" that rely on independent contractors rather than W-2 employees. The Small Business Administration did not modify its application form until the second week of the program.

It meant the "Courier" and similar businesses had their applications delayed. Warren said the Courier's lender, Bank of the West, told him that only businesses that got their applications in by April 8 will be considered for the second round of federal funding. The "Courier" had its application in on the eigth. Now it's a waiting game.

The high demand for loans means that many small businesses may come away with nothing. Catherine McHale, the executive director of the Niwot Business Association, still is trying to figure out options for her independent marketing business. She is self-employed, another area of the program that had a lot of confusion. She's waiting to find out if she has any chance of getting funds since she hasn't yet put in an application.

Whether they got loans or not, small businesses are still looking at hardships and unknowns in the future. The payroll loans are based on only 2.5 months of payroll expenses, but the loan forgiveness program only applies to money spent on payroll and expenses such as rent and utilities for eight weeks from the date of the loan. "Many borrowers think they can apply for loan forgiveness for payroll expenses over an 11-week period," Warren said, "but it's actually only over an eight-week period."

The economy has a long way to go before rebounding. "Businesses will have to face those difficult decisions on whether they have enough business to keep people on staff going forward," said Warren.

Tomich of Old Oak is thinking about that. "We feel lucky, even though we have no idea what to expect. Business is down so much that it feels like it will never come back. Keeping our fingers crossed." he said.