Nearly 80% of small-business owners surveyed on April 17 who applied for the federal loan program that helps cover payroll did not know where they were in the application process, forcing some of them to furlough workers.
“They have no idea if they’re getting the loan,” said Holly Wade, director of research and policy analysis at the National Federation of Independent Business, which conducted the survey.
“Every day that goes by, there are more and more small-business owners having to make tough decisions whether they think they can still use the loan,” said Wade.
Many small-business owners waiting to know the fate of their loans do not have the resources on hand to pay their employees and are forced to furlough them. Once the loan is approved, these employers are put in the difficult position of rehiring their employees.
Employers aren’t required to repay the loan if 75% of the proceeds cover payroll. However, in cases such as those of restaurants that now only offer curbside pickup or delivery, a full staff is no longer needed. Without them on the payroll, the employer might not hit the 75% threshold and therefore must repay the loan.
“It’s been difficult for some small business owners thinking through how they’re going to comply with the requirements for forgiveness with the rehiring,” Wade said, adding that “once you let go of your employees, there’s competing programs.”
One of the competing programs is unemployment insurance, which boosted payments by $600 a week. The added benefit makes it harder for some employers to rehire their workers.
“We are stressing to the administration and Congress that small-business owners need more flexibility when it comes to this loan,” Wade said.
She also said that the Small Business Administration, which runs the loan program, and banks must do a better job of communicating with applicants.
“It’s difficult to get anyone on the phone at SBA. Understandably, they’re overwhelmed, but communication from the SBA and the banks is incredibly frustrating,” she said.
