Committed to empowering small business owners, I recently asked 100 small business clients and colleagues to share their experiences with the Economic Impact Disaster Loans (EIDL) issued in response to the COVID-19 pandemic. Below is a summary of my findings on:
- Who got EIDL and are still struggling
- The impact of EIDL repayment
- Who got grants under the Paycheck Protection Program (PPP)
- The impact of PPP loan forgiveness
- Proposed solutions
Who Were the Small Business Owners Who Got EIDLs?
The complete EIDL data is available online. We are still sifting through it. However, we can share that out of the 100 people we asked about their EIDL experience, all who responded were from historically oppressed groups like women and people of color.
The Impact of EIDL Repayment
Painfully, one of my clients told me:
[A] LOT of businesses (including mine) have still not recovered from those slow years. My company income is still down about 60% and I’m having to draw from savings to keep afloat currently – and that’s WHILE repaying the SBA loans…Check out the current Trust Barometer from Edelman and you’ll see how fearful people are.”
Similarly, a colleague wrote:
My main point of contention is that the SBA loans have to be repaid which will take me longer to do than I may be in biz (since it’s a 30 year loan) whereas friends who received the PPL are free and clear…I am appreciative of the loan as it allowed me to keep going, but it’s also a burden.
Who Got PPP Grants
Let’s be honest. When most people hear the term “small businesses” that are the backbone of the economy, they picture the economic contributions of their favorite coffee shop or boutique, not a business with 500 employees. Yet the Small Business Administration (SBA) includes these businesses in their definition of small. Additionally, when it came to pandemic assistance, celebrities or members of the United States Congress with vast financial and business continuation resources were included. They also got loan forgiveness, while many of the smallest businesses hurting the most are still paying back their loans.
You can search Pro Publica’s website for the complete list of businesses that received PPP grants. After our first search, we were pleasantly surprised to see that most of the loans forgiven were relatively small and probably made a big difference for the dentists, retails stores, spas, and other businesses that rely on in-person sales that weren’t possible during lockdowns. However, there has still been a lot of fraud that will probably never be accounted for.
The Impact of PPP Loan Forgiveness
According to the Pandemic Response Accountability Committee (PRAC), loans could be forgiven if at least 60% of the funds were used for payroll costs for between 8 and 24 weeks after the loan disbursement date. In other words, up to 40% of the funds could be used for other purposes and that portion of the loan was also forgiven.
Many business owners with EIDLs are asking:
Where’s my 40% loan forgiveness? My competitors got an unfair advantage.
Proposed Solutions
We realize no one has to help us, but if you want you appreciate the contributions they’ve made in your communities, we need you to vote with your dollars. Feel strapped to the government because of the EIDLs, we’re afraid we will never be out of debt and able to retire. Yet wealthier business owners with more resources got PPP [Paycheck Protection Program] grants. We need:
- Financial relief while we recover and rebuild
- Resources, such as pandemic assistance counselors
- The same opportunities as everyone else