It is an understatement to say these are unprecedented times. Many businesses have been impacted by the COVID-19 pandemic and Ohio’s Stay at Home orders. The primary concern I hear from many local businesses is that they are facing a cash flow challenge. Businesses deemed “non-essential,” or unable to operate in the manner they were accustomed to are experiencing a significant drop in sales and income.
Congress attempted to address the economic strains on businesses across America by passing the CARES Act last month. This legislation created the Paycheck Protection Program (PPP), allocating $349 billion for small businesses (with fewer than 500 employees). The program was designed to encourage businesses to retain or bring back displaced employees, in exchange for a potentially forgivable SBA loan equal to 2 ½ times monthly payroll costs, which could be used for rent, payroll and operating costs.
Many of our local financial institutions stepped up to help after the PPP loans became available on March 27. Matt Miller, President of Park National Bank stated that he was impressed with the speed in which the legislation was passed to support small businesses, a clear recognition by our elected officials of the impact this pandemic is having on businesses across our country. “We experienced loan volumes in 2 weeks that were equivalent to the number we typically see in a year.”
This was true nationwide, as the program ran out of money within two weeks. Ohio small businesses received $14.11 billion of the $349 billion allocated nationwide. “The surge of applications left most banks unable to meet the needs of every owner who sought help – which is disappointing, because we are committed to helping local businesses,” Miller noted. He added that PNB has a number of applications ready to be submitted once additional funding is available.
More federal assistance appears to be on the way. The U.S. Senate, on April 21, passed legislation to support small businesses, hospitals and fund more COVID-19 testing. This includes an additional $310 billion for the Paycheck Protection Program (PPP). An additional $20 billion in Economic Injury Disaster Loan (EIDL) program funding – providing longer term loans, for larger amounts – is also included. The U.S. House of Representatives was expected to act on the legislation the same week.
Representative Troy Balderson, speaking about the need to support our area’s small businesses, offered the following. “Not only are small businesses the heart and soul of our communities, they also represent the livelihood of millions of Ohioans. . . From ongoing conversations with Central Ohio’s small business owners, it’s clear that Congress must continue to support these job creators.”Additional funding for the PPP and Economic Injury Disaster Loan (EIDL) programs is good news, but it comes with caveats. The additional funding for PPP is likely to be exhausted in a matter of days, as literally millions of small businesses are queued up waiting for loan approval.
These programs can be helpful. It will be a difference between some businesses getting through the crisis or closing their doors for good. It is not the only answer though. We need a tiered recovery plan to get back to some normalcy. More testing, and safety measures that ensure consumer confidence. Many of our local businesses have adapted quickly – accepting orders and payments online, offering “no contact” pick-up and delivery – but there is a long way for many of these businesses to go. Our community needs to support our local businesses. Buy local. Support one another, now more than ever.
Jennifer McDonald is president and CEO of the Licking County Chamber of Commerce.