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Florida small businesses struggle as many get denied COVID-19 loans

A federal loan program for small businesses has denied 48 percent of applicants, leaving 2.5 million business owners without money they’ve requested.

WASHINGTON — Democrats and Republicans reached a rare consensus Wednesday: The federal government is moving too slowly in providing loans to companies struggling with the pandemic.

A federal loan program for small businesses has denied 48 percent of applicants, leaving 2.5 million business owners without money they’ve requested, said James Rivera, an associated administrator with the Small Business Administration during a hearing before a House committee on small businesses.

Rivera conceded that the reasons for denial often are not clearly stated.

Under the $2.2 trillion CARES Act, the Small Business Administration pledged to give business loan applicants an advance of $10,000 for immediate needs while their applications were processed.

Rivera told the committee the applicants didn’t get the $10,000, often receiving only $1,000 per employee because the agency was trying to provide assistance to as many businesses as possible. “Had we used $10,000 we would have been out of funds immediately,” he said.

In early May, the agency committed to giving loans up to $2 million, but instead businesses have been limited to a maximum of $150,000. The average loan, Rivera testified, was $61,000 overall.

The COVID-19 crisis has meant a crush of work for the agency. The Small Business Administration has seen a surge in demand for loans since the start of the pandemic. In a typical year, the agency approves 20,000 loan applications and disburses $1 billion. Rivera testified that the agency this year has approved just over 2 million loans totaling $127 billion. Approved loans can be paid back over 30 years with a 4% interest rate.

The House Small Business Committee members cited complaints from constituents who struggled to get funds and answers from the agency.

U.S. Rep. Ross Spano, R-Dover, said businesses in the Tampa Bay area are frustrated at response as they struggle to adapt to serve customers during the pandemic.

 “In my district I got literally hundreds of calls with respect to the frustration that business owners were having getting information,” Spano said.

Rivera said the Small Business Administration evaluated applications solely based on business owners credit scores, but owners can apply to be reconsidered using other metrics to judge eligibility. However, that would take an additional two to three weeks in an already lengthy process. It takes an average of 41 days for businesses to receive funds.

Tampa native and business owner Robin Rebben, 66, said she received $18,000 from the Paycheck Protection Program, another CARES Act effort to help businesses, but hadn’t heard about the Economic Injury Disaster Loan program. Rebben and her husband, Tim McCormick, own a commercial photography business and have had a studio in Pinellas County since 1991.

Rebben said the $18,000 she received from the Paycheck Protection Program was “nowhere near ‘' enough to keep their business going. Without more help, Rebben said, she would consider retiring.

St. Petersburg Chamber of Commerce Chairman Ryan Griffin, who also is a business owner, received the $10,000 immediate grant for three of his businesses. In addition, his restaurant Trophy Fish received the full $150,000 loan. He had to shut down his cocktail lounge Mandarin Hide for the second time during the pandemic due to orders from Florida’s Department of Business and Professional Regulation.

“The hospitality industry has been somewhat a canary in the coal mine,” Griffin said. “It is probably the most difficult time in the hospitality industry, definitely in our lifetime if not the last hundred years.”

Rivera said the agency currently has $230 billion left but notes that money will only last a few months at the current disbursal rate.

Meanwhile, small business owners continue to struggle through the application process.

“How do you navigate through all these relief options like the SBA, the EIDL, and PPP, and other relief efforts out there,” Griffin said. “Because they’re small business owners for the most part they’re already working 60, 70 hours a week.”

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