Small Business Owners Hung Out to Dry by Government Loan Programs

Small businesses are suffering despite federal loan programs meant to help them through the economic crisis brought on by the coronavirus

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The rollout of government loan programs for small businesses struggling amid the coronavirus shutdown is plagued with problems, some Massachusetts business owners say. 

"If this is how the government is going to handle this, how many businesses are going to go under," said Chris Simpson, owner of Sail to Trail Wineworks in Worcester. "It's a real wake-up call for me about what we can expect from any level of government during any sort of a substantial crisis."

Simpson, who said he was looking at 25% week-over-week revenue growth before the crisis, is now trying to hang on to his winery with a trickle of income from online sales. Simpson has applied for three loans without any luck thus far.

The Massachusetts Growth Capital Corporation Small Business Recovery Loan Fund declined his application with no explanation and said he can't appeal the decision. 

Simpson also applied for $36,000, which is three months of operating expenses, through the United States Small Business Administration Emergency Injury Disaster Loan, but was only approved for $1200 -- an amount his says is far too small to make a difference.

He's still waiting to hear back from the Paycheck Protection Program, which helps businesses keep their workforce employed until they can fully reopen. The $350 billion SBA loan was recently created by the federal government and touted as a way of getting small businesses through this economic crisis brought on by the coronavirus.

"Really now without that loan," Simpson said, "it really is a question of whether or not I'm going to be able to survive to the end of this."

Many small business owners say newly introduced federal loan program to ease the hit from coronavirus closings isn't providing them with the help they desperately need.

The PPP loan is for businesses with fewer than 500 workers. If borrowers don't lay off workers in the next eight weeks, the loan will be forgiven. But the program has gotten off to a slow start, according to some business owners and trade groups. 

Tim Murray, the president of the Worcester Regional Chamber of Commerce, says loans are being submitted, and he hopes the process will be swift. 

"It's been challenging without a doubt," Murray said, "but anytime you're putting something together on the fly to meet a crisis there will be some kinks. Hopefully the loans will close and the money will get out next week because its critical."

Many businesses shut their doors Tuesday after Gov. Charlie Baker ordered nonessential businesses to close. 

The SBA would not share local data on how many businesses have applied for or received the PPP loans. 

"While there were some early bumps, more lenders are coming on board and obtaining the authority through our electronic process in order to be able to submit loans and to obtain the approval from the SBA for the 100-percent guarantee," SBA Massachusetts District Director Bob Nelson said. "The SBA team continues to work in overdrive to respond as quickly as possible in order to respond to requests for assistance and guidance."

Sens. Elizabeth Warren and Ed Markey of Massachusetts sent a letter to the SBA administrator and treasury secretary this week, urging them to quickly issue guidelines and clarifications to ensure that loans are dispersed quickly. 

NBC10 Boston reached out to both senators, but didn't hear back.  

The SBA has re-released a search tool to help business owners find banks and credit unions in their area that can process the applications. You can find it here:

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