The Complicated Story (So Far) of Small Business Disaster Relief: A Timeline
On April 24, President Donald Trump signed into law a third massive COVID-19 pandemic relief bill, this one containing $310 billion to replenish funding for Small Business Administration emergency loan programs. In the space of several weeks, the programs have experienced a year's worth of turmoil. Here's recap of major events, with links to all the programs that have come (and gone, and come again).
March 12 – Nevada Governor Steve Sisolak declares a state of emergency due to the global COVID-19 pandemic and the related developing public health crisis in the state.
March 6 – Trump signs into law an $8.3-billion emergency coronavirus relief package that includes $20 million to help the Small Business Administration (SBA) make $7 billion worth of disaster assistance loans. The law says businesses with fewer than 500 employees that don’t have credit available elsewhere can use the loans to pay fixed debts, payroll, accounts payable, and other bills. It lays out interest rates of 2.75 percent for nonprofits and 3.75 percent for for-profit businesses and terms of up to 30 years.
March 14 – Joseph Amato, the SBA’s Nevada director, tells Desert Companion about the new Economic Injury Disaster Loan, or EIDL, program. He repeats the terms laid out in the March 6 relief package but says his understanding is there’s an allocation of $50 billion nationwide, $2 million per business. Asked if there will be grants in addition to the loan program, Amato says, “No” and that the business owners he’s hearing from aren’t looking for that.
March 16 – Amato repeats, this time on KNPR’s “State of Nevada,” that small businesses can get up to $2 million through the EIDL program. The national SBA specifies that disaster loans can be used for “fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.” In the following days and weeks, the SBA extends the COVID-19 EIDL program to all U.S. states and territories and adds the possibility for applicants to secure an advance on their loan of up to $10,000. “This loan advance will not have to be repaid,” it says.
March 17 – Sisolak directs Nevada’s nonessential businesses to close for “at least 30 days.”
March 18 – Sisolak announces Nevada has statewide approval for SBA disaster loans, repeating Amato’s EIDL interest rates, as well as the $2 million-per-business limit.
The same day, Sisolak shuts down Nevada casinos, ordering: “The Nevada general public shall cease gathering at gaming establishments, and all gaming devices, machines, tables, games, and any equipment related to gaming activity shall cease operations.”
March 19 – Sisolak asks Trump to remember the hospitality industry in federal recovery packages.
March 20 – Sisolak, using more decisive language than he had on the 17 th, orders nonessential businesses to close. The following day, the Las Vegas Metropolitan Police Department announces it will start patrolling businesses for compliance with the order.
The same day, the IRS says small and midsize employers can start claiming two tax credits to fully reimburse them for the cost of providing the required coronavirus-related paid leave to their employees. The credit applies to businesses with fewer than 500 employees; those with fewer than 50 can apply for an exemption to the paid leave requirement through the labor department.
March 22 – Social media groups where small businesses share their pandemic experiences begin to spring up. Some (like this one, with 50 members from Las Vegas) will host hundreds of posts a day, mainly from confused SBA loan applicants.
March 23 – Nevada’s Department of Employment, Training, and Rehabilitation asks employers to file their first-quarter 2020 contributions and wage reports as soon as possible (undoubtedly so the agency can start processing its unprecedented number of unemployment insurance claims), adding that employers’ billing statements for March will only be available online.
The National Federation of Independent Businesses, a lobbying group, releases the results of a survey showing 76 percent of small businesses have already been negatively impacted by the coronavirus pandemic.
March 27 – Trump signs the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. It establishes a new $349 billion Paycheck Protection Program, or PPP.
March 31 – The SBA unveils the PPP, telling employers they should be able to begin applying for the loans by April 3. Banks, credit unions, and other lenders who already administer the SBA’s 7a loans (a pre-existing program) will make the PPP loans using their own systems and processes, it says. Businesses with fewer than 500 employees, as well as independent contractors and the self-employed, can use the money for up to eight weeks of payroll and other qualified operating expenses, retroactive to February 15 and through June 30. The maximum amount of these loans — which have such favorable terms as 1-percent interest, no payment for six months, and no collateral required — is set at $10 million. The SBA says it will “forgive the portion of the loan proceeds that are used to cover the first eight weeks of payroll costs, rent, utilities, and mortgage interest.”
The SBA also says it will cover creditors’ principal, interest, and fees on existing disaster loans, through its SBA Debt Relief program.
April 4 – The SBA clarifies that faith-based organizations impacted by the COVID-19 pandemic are eligible to apply for the EIDL and PPP.
April 8 – The news media begins to report on apparent changes in the SBA programs, such as a limit on EIDL advances of $1,000 per employee, rather than the $10,000 originally stated.
April 9 – Las Vegas attorney Faith Jones posts a recording of a webinar on Vimeo in which Amato accuses big banks of dragging their feet in making loans to small businesses and nonprofits under the PPP.
The Hill publishes an op-ed by Amanda Ballantyne, the executive director of lobbying group Main Street Alliance, which calls out the PPP as unworkable, massively underfunded, and unable to reach those who need it most. “Desperate small businesses, confused lenders and crashed websites are not just the growing pains of a new program,” Ballantyne writes. “This botched roll-out reveals the underlying problems in its design.” She suggests an alternative approach using direct federal subsidies and a more streamlined process.
April 10 – Echoing complaints posted on social media, Politico reports that the SBA is actually not issuing loans in amounts anywhere close to the $2 million cap. It links to a memo, published by the New York Times, telling an applicant that the maximum loan amount is $15,000.
April 15 – The Treasury Department changes SBA rules to allow more businesses involved in gaming to qualify for the PPP.
Also this day, the SBA reports that, having processed 14 years’ worth of loans in 14 days, it has run out of funding for the EIDL and PPP. “We urge Congress to appropriate additional funds for the Paycheck Protection Program — a critical and overwhelmingly bipartisan program — at which point we will once again be able to process loan applications,” it says.
April 17 – The NFIB issues a 10-point plan for small business survival. Step one, it says, is to extend the PPP; other steps include fully funding the EIDL, increasing flexibility for loan forgiveness, and a Congressional statement of policy on the future of small businesses. The organization’s Nevada director, Randi Thompson, says, “Nevada businesses need more help! I have talked with numerous small-business owners who applied for the Paycheck Protection Program but failed to receive the loan. … Compared to states similar in size, Nevada received about a third of the loans and financial support than other states.”
BuzzFeed News breaks a story about large restaurant chains (with far more than 500 employees nationwide) getting SBA COVID-19 loans from JP Morgan worth $10 million-$20 million. Other news outlets report that lenders got $6 billion in fees from the programs.
The SBA releases a statement touting the PPP’s success, citing figures suggesting 1.6 million small businesses, representing all 50 states, had received loans, nearly two-thirds of which were for less than $150,000.
April 20 – The SBA reports that Nevada has made 545 EIDL loans totaling $118 million, out of a national total of 27,000 loans worth $5.6 billion. As for EIDL advances, Nevada has doled out more than 8,000 of the grants for $33 million, part of the 755,000 advances processed nationwide totaling $3.2 billion.
April 21 – The Washington Post reports that 8,000 EIDL applicants’ data may have been exposed to others in the program.
April 23 – The House passes what some beltway insiders call “Coronavirus 3.5,” a $484 billion funding package for various types of relief, including $310 billion for the PPP.
April 24 – With funding replenished, the SBA saysit will start accepting applications for the PPP again on Monday, April 27. "We encourage all approved lenders to process loan applications previously submitted by eligible borrowers and disburse funds expeditiously," says a joint statement by SBA Administrator Jovita Carranza and U.S. Treasury Secretary Steven Mnuchin.
Invoking the recent bad press, NFIB President Brad Close warns in a statement: "NFIB is fully expecting that this new round of small business assistance will go to small businesses who need it the most, not publicly traded companies and large businesses that have access to other credit options."
The SBA also revised PPP rules to allow small gaming businesses that are otherwise eligible for the program to apply.
May 3 – Carranza and Mnuchin declarethe second round of PPP funding a success, citing internal data that shows 2.2 million businesses have gotten loans worth $175 billion. "Notably, the average loan size in Round 2 is $79,000, yet another indicator that the program is broadly based and assisting the smallest of small businesses," they say.
May 4 – The NFIB releasesresults of a survey showing that 77 percent of the small businesses surveyed have successfully submitted an SBA loan application and 61 percent have received funds.
May 7 – The New York Times publishesa data analysis showing that a bulk of SBA loans have gone to areas least-hardest-hit by the coronavirus.
Also on this day, Sisolak implementsPhase 1 of Nevada's "Road to Recovery," effectively reopening bars, restaurants, retail stores, salons, and some other businesses, albeit with certain restrictions meant to keep the coronavirus in check.
NOTE: This story was updated May to include the latest developments.