06 May, 2020

The Sunshine Economy: Borrowing And Business During COVID-19


A store in North Miami Beach advertises with a "Going out of business" sign on April 30, 2020. Over 184,000 Florida businesses received Paycheck Protection Program loans in the last week of April, according to the Small Business Administration.

Pilar Guzman Zavala and Bill Feinberg own very different companies, but both have been hit by COVID-19. Dozens of employees between them have been brought back thanks to emergency borrowing programs instituted to help companies keep people employed.

Six weeks ago Zavala had about 100 people working for her and she was busy working on expanding her company into franchises at airports across the country. She is the CEO and owner of Half Moon Empanadas. It has 13 locations, including Miami International Airport and the Miami Beach Convention Center. But she has been closed since mid-March thanks to
the efforts to slow the spread of the coronavirus.

She’s been able to bring back her 11 salaried managers and 25 of her hourly full time staff. Her first rescue was a bridge loan through the state of Florida. That paid for a month of payroll, then she applied for the federal government’s Paycheck Protection Program. That’s the money approved by Congress targeted for companies of less than 500 employees.

But there were problems with the first round. Big companies with fewer than 500 people working at any one location were able to get the loans. Some like Shake Shack and Ruth’s Chris Steakhouse announced they will give their loan money back. And small companies like Zavala’s had trouble working with big banks to apply for the loans. She applied with three
banks before getting an answer.

Feinberg did not have similar trouble. He owns Allied Kitchen and Bath based in Fort Lauderdale. He received a loan of several hundred thousand dollars allowing him to bring back most of the 35 workers he had to furlough in the early days of the virus.

"I brought back people but I don't have work for them to do," he said.
That's the point of one of the emergency loan efforts approved by Congress- to ensure companies have the cash to keep people employed even if there's no work for them right now.

The Sunshine Economy spoke with three South Florida bankers about borrowing and business, and took listener questions.
Below are highlights of the program.

My family member was approved (for a PPP loan) in three or four days. They got about $200,000. People seem to think this should have gone quick. If people have accurate information, if people meet all the criteria, people will get approved.

Bobby from Miami

Apollo Bank CEO Eddy Arriola: Bobby's absolutely right. The SBA has done an amazing job of rolling out an incredibly massive program in a very short period of time. It does come down to, are you quick? Are you accurate? Are you complete? And that's kind of how we prioritize.

I applied for the loan April 3rd. I have a small restaurant in Boca Raton. I only had three months of payroll in 2019 because I bought the business end of September. So I had October, November, December. (The bank) divided by 12. (The SBA) approved a loan for one quarter of what it should be. So I did not accept it. I wanted to apply with a smaller bank. What do I do? - Lenny from Boca Raton

Arriola: I know the exact situation Lenny is going through. This happened to literally hundreds of thousands of businesses. We're calling the SBA on behalf of our customers. In some cases, we've gotten the SBA to sort of revoked one of the SBA approval numbers and in other cases, people have been sort of waiting in the queue.

I'm an independent contractor.
I applied in the first round and, of course, that was a nightmare. They ran out of money right away. Second round -- I applied the first day and I'm just waiting, waiting, waiting and I'm not hearing anything.- Rose Ann in North Miami Beach. I'm an independent contractor as well. I'm in the real estate business. My problem is I can't even get to even apply for a loan with my three banks that I have longtime relationships with.

Patricia in Miami

American National Bank CEO Ginger Martin: We have been accepting and approving of people that are 1099 contractors. It's a totally different process. The information required to actually calculate the loan amount is different for those.

Power Financial Credit Union CEO Allan Prindle: We've had many (independent contractor) approach us for help and we've worked with them, whether it be the existing loan they have
with us or try to give them referrals to banks doing PPP. But I think you see the theme between those two calls, the importance of of local institutions.

(NOTE: Power Financial is not
processing PPP loans.)

I was supposed to open a small coffee shop in mid-March. And obviously that was canceled due to the pandemic. We had our employees ready to go, but we hadn't actually started yet. Now, do I qualify for the PPP?

Jessica in Fort Lauderdale

Martin: This is all focused around payroll.

I'm concerned as a sole proprietor who is eligible to file for the PPP, but they don't really have a payroll. They are eligible and they're getting funding. However, how are they going to get (the loan forgiven) without a payroll?

Marjorie in Miami

Prindle: They would just document what they were paying themselves.

My question is regarding the companies that have a payroll, but all of their employees are 1099. How are those processed?

Tony in Pompano Beach

Prindle: It is my understanding that they would have to apply individually.

I applied for the first round and I'm trying to find out if I should apply the second time. My assumption was that one application is sufficient and he will carry through.

Haykul in Miami

Martin: I would definitely advise that you apply at another bank. We have people who had applied at a bank, had not heard back or had actually even heard that they were way down in the queue. And they applied with us and we got approval for them in less than 24 hours.

Any advice on what (companies) should be doing when neither of the banks or the SBA are giving clear guidance?

Mike in Fort Lauderdale

Martin: We've definitely heard numerous stories exactly what he was sharing. I just can say that each bank is kind of handling things differently.

We are a pretty small business in Doral. We applied for the PPP through our bank and they said, "You're late for the first round, but you're right in the front in the second round." So we asked to fill out an application and it told us an application was not available yet. Finally, the application becomes available and I get an email from (my bank) saying it wasn't accepting anymore applications. I'd like to know what are my options at this time?

Eli in Miami

Martin: I do know there's still banks in Dade County — community banks — that I believe are accepting PPP application.


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