GRAND RAPIDS, Mich — The waiting and the anxiety continue for local companies that haven’t been denied outright for a small business loan.
The initial $350 billion in funding for the federal Paycheck Protection Program has run dry while many applications are still pending or missed out on the first round entirely. Companies like Midwest Air Filters in Grand Rapids only wish they had that clarity.
“We’re not denied per say, we haven’t gotten a denied stamp on it yet,” said co-owner Marcie Shoham. “But we are waiting to hear, we’re sort of in a limbo.”
Midwest Air Filters, a family-owned company for nearly seven decades, has already been flat out denied for a small business loan from the state specifically for companies like them, who are ready to make personal protective equipment with minor adjustments to their manufacturing.
“We were sort of already half-in filter manufacturing as it was,” said Shoham. “We could’ve been a local, Michigan manufacturer for PPE that’s halfway already in it. It wouldn’t have taken much more for us to be able to go, I mean I have the sources for the equipment already lined up.”
The worry now is if Shoham can’t secure a loan from the PPP, their already reduced work force might have a tighter financial strain placed on it, and there wasn’t much wiggle room to begin with.
“I do have work for my employees,” she said. “They want come back I get text messages all the time ‘please tell me when we’re coming back, I want to come back to work.’ But I can’t bring them in as a small business without some sort of help from the government on the Paycheck Protection Program.”
Just Tuesday, the U.S. Senate voted on and passed a $500 billion aid package that would replenish the small business fund with an expected $300 billion. As it heads to the House next, Paul Isely, Associate Dean of Grand Valley State’s Seidman College of Business, says the original funding expired much faster than anticipated.
“They ran through the first tranche of money much faster than they expected,” said Isely. “There was much higher demand than they expected.”
Because much of the new funding will go to businesses who missed out on the first round – and whose applications are still pending like Midwest Air Filters – it won’t last long. Isely expects somewhere around 6-to-10 days.
He also said consumers and companies should expect an impact similar to the economic crisis of 2008. With all the business loans and unemployment payments entering the economy soon, Isely thinks things will start to level off, at least for a time, when May rolls around.
“That’s sort of like starter fluid going into an engine,” he said. “If you can’t start the engine in May, then we’re in this for a much longer haul.”
Adding to the frustrations of small business owners like Shoham are headlines that large franchise chains have dipped into the SBA loans intended for small local business. Large chains like Ruth’s Chris, and Potbelly’s applied each of their franchise locations individually, a provision allowed by the PPP, and received millions in funding. Just recently, fast-food chain Shake Shack returned a $10 million SBA loan after criticism.
“I don’t understand ethically why someone like Shake Shack, bless them, would apply for a program when they would have so much cash,” said Shoham. “They don’t need that to survive. Small businesses need that to survive.”
Isely thinks the next funding bill will address that.
“Many of these corporations that are in that size range – in that larger size range – are able to secure funds in other ways,” he said. “It is really hard for the small businesses.”