Major Fixes Made to Small-Business Loan Program - The Wall Street Journal

Major Fixes Made to Small-Business Loan Program - The Wall Street Journal

Major Fixes Made to Small-Business Loan Program - The Wall Street Journal

Posted: 05 Jun 2020 02:56 PM PDT

WASHINGTON—President Trump on Friday signed into law a bill giving companies more time and flexibility to spend funds from the federal aid program to help small businesses during the coronavirus pandemic.

The new law overhauls the Paycheck Protection Program, which provided $660 billion to help companies generally with fewer than 500 employees.


Small business is desperate. Could $1-billion program help? - Los Angeles Times

Posted: 05 Jun 2020 09:42 AM PDT

After a thief hit the Hollywood restaurant Los Balcones del Peru during a wave of protests against police brutality on Saturday night, owner Jorge Rodriguez counted himself lucky enough to laugh about it.

"He grabbed the most expensive wines we had and took off," Rodriguez said, adding that the man left the restaurant otherwise untouched. "It looks like he had a taste for red wines. He didn't touch the whites."

Rodriguez maintains a grim sense of humor even as he struggles to keep his business on life support.

The restaurant sits on Vine Street, a short walk from the ArcLight Cinemas. Like other businesses that serve tourists, Los Balcones took an early hit from COVID-19, the illness caused by the novel coronavirus. "January is when we start getting all the travelers from Asia and Europe," Rodriguez said. "We never got that traffic."


Takeout customers trickle in and out, but his employee count is down from 43 workers to seven. He can't open for limited seating until early July. The restaurant received Paycheck Protection Program money from the federal government, but that will soon be gone, with the resumption of normal business a distant prospect.

Millions of small businesses in California and around the country are in a similar predicament. Their livelihoods already were threatened by the COVID-19 lockdowns and the dearth of business traffic. Then, for many, came revenue losses from curfews and property damage or inventory loss due to break-ins and vandalism. Loans are hard to come by and dauntingly expensive.

Seeking to provide a lifeline, a Bay Area group created in March is launching an ambitious California-wide program to raise $1 billion in capital to help otherwise healthy small-scale establishments survive the next several months.

Community lenders, law firms, universities, philanthropies, small-business trade groups and individual volunteers have joined forces as the California Small Enterprise Task Force to drum up funding to provide cash to sustain working capital and other essential expenses until — everyone hopes — a better economy boosts customer spending next year.


"We're trying to prevent or lessen the number of people in bread lines," Susan Mac Cormac said. A corporate lawyer and partner at the international law firm Morrison & Foerster, Mac Cormac helped come up with the task force plan, which she sees as vital to preventing a wave of poverty. "We can't address the economic issues of COVID-19 and the George Floyd murder without being able to provide jobs in these [low-income] communities," she said. "And the only people that hire people in these communities are microbusinesses."

In a March survey by the Small Business Majority advocacy and education group, 44% of small-business owners said they would have to shut down for good without immediate financial help. Many did receive forgivable loans under the Coronavirus Aid, Relief, and Economic Security Act passed by Congress. But big wads of emergency federal loan money went to fast-food chains, hotels and other companies with big bank relationships and the wherewithal to hire high-priced lawyers, accountants and lobbyists.

"Federal and state funding is not reaching the companies that need it most," Mac Cormac said. "But the need is huge."

The expected high default rate for small-business recovery loans is translating into interest rates "way above normal times," said Adair Morse, a finance professor at UC Berkeley's Haas School of Business. For the hardest-hit areas, she estimates rates "in the order of 25% to 30%, if not a lot more." So loan programs "must at least be partially subsidized by government or philanthropy backstops," she said.


The California task force started out mainly to offer advice to small businesses. Another early catalyst was Adam Werbach, a Bay Area environmentalist and entrepreneur. "Everyone felt devastated with the pandemic, so we drew together resources and skills to meet the need." Students at UC Berkeley's law school set up a hotline. The task force created a well-organized, comprehensive resource guide and posted it online.

After the flaws in federal aid programs became clear, Mac Cormac and her fellow volunteers decided advice wasn't enough. More access to low-interest loans was needed. A lot more.

The federal Paycheck Protection Program defined a company with up to 500 employees as "small." The California program is for businesses with no more than 75 employees. The vast majority of recipients will have far fewer than that, organizers said. The $1-billion program, called the Small Business Rebuilding Fund, is primarily a loan program, not a grant program.

Morse of Berkeley's Haas School is helping structure the program. The main aim is to lower interest rates for small-business owners to a realistic level while "de-risking" the investments for those fronting the money.


That requires government loan guarantees and lenders with skin in the game. Businesses that apply will have to show they'll be "viable" after the gap period. "Using limited taxpayer money, we need to do so in a way that maximizes spillovers back to the economy, so that the debt the government incurs today supports economic growth," Morse said.

California Gov. Gavin Newsom has set aside $50 million to seed such programs, with another $50 million in his budget for legislative approval. The loan program would help small businesses access those funds. The group is lobbying Congress to add money to small-business loan programs the fund could tap. The California group is also raising money from philanthropic organizations.

Kiva, a San Francisco-based crowdfunded distributor of loans to "unbanked" small businesses worldwide, will administer the program. The loans will be pooled, Wall Street-style, with the pools, rather than individual loans, assessed for risk. Commercial lenders will be paid off first, philanthropies last. Some grants will be made to businesses that can demonstrate a strong business plan. Law firms including Morrison & Foerster and Silicon Valley powerhouse Cooley offer pro bono advice.

Mac Cormac said people from seven other states so far have approached the California group to learn about the program and possibly create their own.


It'll take effort and cooperation, said Mark Herbert, the California representative for Small Business Majority. If small businesses can't get access to capital, and soon, "the ripple effect and economic devastation that follows will be incalculable," he said. "But I'm an optimistic person. I'm hopeful that policymakers and other leaders will do everything in their power to make sure we have tools to prevent that from happening."

A billion dollars is a lot of money, said restaurant owner Rodriguez. "But it's a lot cheaper than letting all these businesses go under."

Good news for small businesses as Trump signs PPP reform bill into law - CNBC

Posted: 05 Jun 2020 12:47 PM PDT

U.S. President Donald Trump arrives to deliver remarks and sign the Paycheck Protection Program Flexibility Act of 2020 in the Rose Garden of the White House on Friday.

Photographer: Yuri Gripas/Abaca/Bloomberg via Getty Images

Business owners who received a forgivable loan through the Paycheck Protection Program are getting more leeway on how to spend those funds.  

President Donald Trump signed legislation on Friday that restructures how entrepreneurs can use loans issued through a new federal relief program for small businesses ailing from the economic contagion unleashed by the coronavirus pandemic. 

Many business owners had called on the federal government to update the Paycheck Protection Program as they struggle to meet its terms and fear they may be forced to take on debt even as their businesses haven't fully recovered.

The bill, the Paycheck Protection Program Flexibility Act of 2020, was passed in the Senate on Wednesday. The House passed the legislation last week. 

The new law addresses concerns around loan forgiveness, one of the main attractions of the Paycheck Protection Program. 

"The President's signing of the Paycheck Protection Program Flexibility Act of 2020 into law is welcome news for small businesses across our nation," said Kevin Kuhlman, vice president of government relations at the National Federation of Independent Business, a trade group representing businesses. 

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Loan forgiveness rules

PPP loans convert into a federal grant if business owners meet certain conditions.

Current rules require business owners to spend their money within eight weeks and direct 75% of funding toward payroll costs to get their loan fully forgiven. 

The new law extends the deadline to 24 weeks from eight weeks and reduces the share of funding that must be directed toward payroll costs to 60%. It also pushes back a June 30 deadline to rehire laid-off workers.

The Small Business Administration, which oversees the lending program, had approved more than 4.5 million PPP loans worth $510.8 billion as of Thursday evening. More than $120 billion in funding is still available.  

People thought two months was probably going to be enough to get it done. It turned out, it's not.

Paul Becht

CPA and partner at accounting firm Margolin, Winer & Evens

The law comes as most borrowers are poised to extinguish their funding by the end of June.

The current eight-week spending period ends for 30% of borrowers by June 14, according to a recent NFIB survey. Another 36% will do so in the second half of the month.

However, some businesses may not be able to re-open by the time their funding runs out due to existing state or city orders, leaving many wondering how they'll continue to fund operations after PPP funds are gone. They may also be re-opening at a fraction of their prior capacity due to social-distancing concerns. 

"People thought two months was probably going to be enough to get it done," said Paul Becht, CPA, a partner at accounting firm Margolin, Winer & Evens. "It turned out, it's not."

It's also proven challenging for the self-employed, businesses with few employees and those in metropolitan areas that have high rent payments to devote 75% of loan funding toward payroll costs. The PPP Flexibility Act grants more leeway, so 40% of the loan could be directed toward non-payroll costs.

The President had signaled support for the new measure during a White House event on Monday with restaurant executives who sought changes to the Paycheck Protection Program. 

"We're not asking for more money," said Tim Love, a celebrity chef with restaurants in Texas and Tennessee, during the meeting. "We're just asking for the opportunity to spend it the way it was intended."

The bill's signing comes amid debate between lawmakers over the contours of a potential future round of financial relief. The coronavirus pandemic pushed broad swaths of the economy to shut down in mid-March and nearly 43 million Americans to file for unemployment.

Collateral damage: Can small businesses survive this “double whammy”? - CALmatters

Posted: 05 Jun 2020 01:28 PM PDT

In Summary

The timing couldn't be worse for small businesses in California just starting to reopen from the pandemic, then damaged amid anti-racism uprisings.

Zahalea Show-Anderson spent last Sunday afternoon tidying up her dojo for its grand re-opening. After nearly 10 weeks in which a coronavirus-driven shutdown kept the lights off and the doors locked, the Urban School of Self Defense, a jiu-jitsu academy in downtown Long Beach, was ready to let its students back in.

A few hours later, Show-Anderson was home in front of the TV, watching the dojo go up in flames.

"We've been there 25 years and there are a lot of things that money cannot buy," she said a few days later. "There were a lot of stories in there. It's really just going to be a memory now." 

In a week of peaceful protest against police violence, politically motivated vandalism and arson, and opportunistic theft, Show-Anderson's academy, like many small businesses across the state, has become the collateral damage. 

The timing is, of course, horrible. 

First there was the pandemic. Then came the shutdowns. No more customers, no more revenue, but no freeze on monthly rent, lease payments or insurance premiums. And just as the shutdowns were starting to lift, this.

"'Double-whammy' doesn't even begin to describe it," said Rachel Michelin, president of the California Retailers Association. "We were finally seeing the light at the end of the tunnel."

In Minnesota — where a white police officer's killing of black man George Floyd triggered the last week of unrest — lawmakers have called for the use of state funds to reimburse businesses that have had their windows smashed, their walls graffitied or their inventories looted. 

So far that kind of targeted help is not forthcoming from Sacramento. Despite historic levels of unrest we've seen across the state, legislators are focusing on other crises: a pandemic, an economic collapse and a rapidly approaching deadline to pass a state budget despite an 11-digit shortfall.

While large retailers such as Target, Walmart and Gap have selectively shuttered stores around the country, vowing to continue to pay workers in the meantime, smaller operations like Show-Anderson's have had to put their reopening plans on hold — if not cancel them all together. That leaves them hoping for some relief from their insurers, if they have them. If they don't, they've turned to the kindness of strangers — those who helped sweep up glass and who have donated money online to rebuild.

State regulators and business groups say it's still too early to assess how many California small businesses suffered property damage or suffered theft losses in the tumult of the last week, or to gauge the full extent of the financial harm. 

By historical standards, the damage may be widespread, but it might not be especially high.

"Yes, black lives matter. But my black business matters too."

shop owner Lilly Ayers

During the Los Angeles riots of 1992, where 63 people died in and around Koreatown, the estimated financial cost to insured property has been put at $1.4 billion, after adjusting for inflation, according to Verisk Analytics.

What distinguishes this latest outburst of collective rage and opportunistic criminality is how far it has traveled up the income ladder. Vandalism and theft took place in the lower-income Fruitvale district of Oakland and Vallejo, but also tony, mostly white West Hollywood and Walnut Creek.

"We want to go to places of white affluence so that the pain and outrage that we feel can be put right in their faces," Melina Abdullah, a Black Lives Matter organizer and a Cal State Los Angeles professor, told the Los Angeles Times.

Local news coverage indicated that some protest organizers made a deliberate effort to bring the unrest to wealthier, whiter neighborhoods and the businesses there — protesters said they wanted to ensure those communities couldn't just escape into their own privilege.

But while the total cost to businesses has yet to be tallied, after months of pandemic and recession, many businesses were only barely hanging on. 

That includes businesses like Lilly Ayers' in downtown Oakland. Ayers and her husband, Kyrah, are the owners of Queen Hippy Gypsy where she sells crystals, incense and essential oils. By late-May, the couple were late on rent. They had just thrown together a website to allow for curbside delivery and get a little cash coming in. Then last Friday, someone bashed in her front window. 

Ayers had hoped insurance would cover replacement, but was told that her general liability policy did not cover the window damage. 

Financial cost aside, as a black business owner and an Oakland native, having her business vandalized amid a nationwide protest in defense of black life has been emotionally draining. 

"I am a part of this too. I am hurt. George Floyd did not deserve to go," she said. "Yes, black lives matter. But my black business matters too."

Store manager Geneva Demmitt prepares for a crowd of customers by placing rainbow strips of tape six feet apart on the sidewalk in front of boarded up businesses along 14th street in downtown Oakland. All of the businesses on this were vandalized during recent protests earlier this week against police violence. Photo by Anne Wernikoff for CalMatters
Store manager Geneva Demmitt prepares for a crowd of customers by placing rainbow strips of tape six feet apart on the sidewalk in front of boarded-up businesses along 14th Street in downtown Oakland. All of the businesses on this street were vandalized during recent protests earlier this week against police violence. Photo by Anne Wernikoff for CalMatters

State insurance regulators say that, contrary to Ayers' experience, most standard commercial insurance policies should cover the cost of vandalism and theft — even if they do not cover the cost of having to stay shuttered for weeks on end.

But after spending months with little to no business during the pandemic, some business groups worry that some small businesses may have allowed their policies to lapse — at the worst possible time.

Even after businesses across the state realized that many insurers were refusing to cover costs associated with a worldwide pandemic, Janet Ruiz, a spokesperson for the Insurance Information Institute, said she and her colleagues were urging businesses to keep their policies at all cost. "You could still have a fire, even if you're closed and not there," she said. "And there's always the possibility of regular vandalism — though we didn't foresee riots."

Even for insured business owners, policies often come with large deductibles. Owners also are generally required to pay for repairs out of pocket before they get reimbursed, said Ari Takata-Vasquez, director of the Oakland Indie Alliance, a nonprofit that supports small restaurants, bars and shops around town.

The California Department of Insurance has no estimate, a spokesman there said, of the number of businesses in California who lack insurance or allowed their policies to lapse since the beginning of the recession. 

Oakland businesses are no stranger to vandalism and theft "even when there aren't riots," she said. "On a normal day it sucks, but you're able to rebound. But we're particularly concerned now for businesses that are small and local and often under-capitalized and can't just can't pony up the money."

Small, under-capitalized businesses have struggled to get credit since the beginning of the public health crisis. 

"On a normal day it sucks, but you're able to rebound.

Ari Takata-Vasquez, Oakland Indie Alliance

So far the federal government has offered more than $700 billion low-cost loans to businesses. But advocates say the rules of the Paycheck Protection Program, the largest source of such cash, have made it particularly difficult for smaller businesses — particularly those owned by people of color — to access that cash. 

The program's guidelines do not require lenders to channel the money to historically disadvantaged markets, and black and brown business owners are more likely to have no employees and to have prior felony convictions, excluding them from eligibility, according to an analysis by the Center for Responsible Lending

Connections also make a difference.

"A lot of banks were just serving their existing customers, so if you had that prior banking relationship you were already in line," said Paulina Gonzalez-Brito, executive director of the California Reinvestment Coalition, which pushes for more equitable lending practices. "Immigrant-owned small businesses, black-owned small businesses — they were often not in line." 

Show-Anderson, a black woman, stressed that her business has always been "part of the movement" to empower people of color through self-defense. To stay afloat during the statewide shelter-in-place order, she applied for a federal loan from the Small Business Administration in April. She said she has yet to hear back.

It's unclear whether the state will cough up more money anytime soon.

Early in the pandemic, Gov. Gavin Newsom used his emergency powers to park $50 million in the state's Infrastructure and Economic Development Bank, or I-Bank. Those funds are meant to backstop private loans to small businesses unable to access federal relief funds, paying back lenders up to 95% of loans if businesses don't or can't.

In May, the governor proposed another $50 million. With a June 15 deadline to pass a budget, that is still up for negotiations. 

Mark Herbert with the Small Business Majority, an industry group, is pushing for that extra support. 

"We have to have government-backed capital to survive the next six months," he said. That's particularly true for "businesses that are not likely accessing federal relief and not accessing traditional forms of credit."

In the meantime, many cash-strapped businesses are turning elsewhere.

"We understand there are those white supremacists. But there are a whole bunch of people who aren't like that and it shows."

Shayla Jamerson, SoOakland

Oakland Indie Alliance has its own fund to help small businesses. As of Wednesday, said Takata-Vasquez, it had nearly $100,000. She said she was not surprised that no financial aid has been forthcoming from the city, county, or state. "We didn't get support during the occupy movement either."

The GoFundMe website is filled with campaigns for businesses that have been robbed or vandalized. Shayla Jamerson, who runs the event production company SoOakland, set up a campaign with the goal of raising $5,000 for black-owned businesses. Within three days she'd raised $120,000.

"That just shows how together we are as a community," she said. "We understand there are those white supremacists. But there are a whole bunch of people who aren't like that and it shows."

On Thursday, Lilly Ayers' crystal shop was the only operation open on the 300-block of 14th street in downtown Oakland. To the left, a boarded-up beauty salon. To the right, an electronic shop cleaned out over the weekend remained closed, a handwritten sign apologizing for the inconvenience. 

Ayers and her husband, Kyrah, had a bubble machine whirring next to their table topped with rose quartz, statutes, a bottle of hand sanitizer and a tip jar. A small crowd in facemasks  gathered to shop or take in the rare good vibe. 

Among them was Chris Aivaliotis, the white manager of the neighboring Kon-Tiki bar. Aivaliotis said he's been doing a lot of thinking about the appropriative, mostly-invented tiki culture, the blood history of the rum trade, and his role as a white guy in the local business community.

It's a community, Lilly Ayers said, that has been enormously supportive. "There's no way anyone who is from our community would do this," she said, pointing to the fractured glass window. 

Aivaliotis stepped forward and dropped a hundred dollar bill into the tip jar. 

PPP loans aren't making it to many small businesses in Texas - The Texas Tribune

Posted: 05 Jun 2020 04:10 AM PDT

This article is co-published with ProPublica, a nonprofit newsroom that investigates abuses of power. Sign up for ProPublica's Big Story newsletter to receive stories like this one in your inbox as soon as they are published.

In the 17 years Irma Corado has run her international package delivery service, she had never asked any government agency for help. When her youngest son told her about a small-business county loan to help those affected by the coronavirus, she reluctantly agreed to apply.

"I was leery," she said in Spanish, but decided to leave it "in God's hands." She hadn't worked in more than two months, and her business rent and utilities were due.

The Harris County resident had reason to be doubtful. Corado said she struggled with and did not complete an online application for the Small Business Administration's Paycheck Protection Program, or PPP. She got to the point where the system asked about payroll, she said, and because she uses the money-transfer tool Zelle to pay her salary, she didn't think she qualified.

The PPP has approved nearly 4.5 million loans worth about $500 billion, but it continues to leave out many business owners who don't have an accountant on speed dial, are not computer savvy, lack the language skills to navigate the banking system or opt not to try. That has particularly affected very small businesses and those owned by people of color.

The SBA acknowledged that established businesses "knew how to work the system" to get the loans, but mom-and-pop merchants were always at a disadvantage because they lacked the resources to quickly tap into that capital.

"We are the advocate for the underdog, the smaller business that doesn't know that these resources are available, we are doing the best we can, we only have 14 on our staff," said Charles Abell, a spokesman for the SBA's Houston district office, which oversees 32 counties in Southeast Texas with 600,000 small businesses.

That's one employee for 42,000 small businesses.

In an unprecedented move, local governments across Texas have rushed to fill the void.

They have poured millions of taxpayer funds into a patchwork of loan and grant programs to help small merchants that are a major driver of the local economy and tax base. Unlike the federal program, these local efforts have far fewer hoops to jump through. Applicants don't have to show proof of payroll, as there are no restrictions on how the money can be spent as long as it's tied to the business. All they need is to be in good standing with their property taxes and located in that jurisdiction.

The demand for the loans has been overwhelming. In just 28 hours, Harris County, the third-largest in the country and home to Houston, received more than 7,000 applications requesting $150 million in April. Only $10 million was available, taken from the county's rainy day fund.

Meanwhile, the string-laden federal PPP program still has an untapped $120 billion.

"The federal government is so far removed from the local community that it didn't think about, and it can't think about, simplicity," said Harris County Commissioner Adrian Garcia, who spearheaded the county's loan program.

"My charge to my staff was to keep it simple," he said. "We got to make this easy to apply for and user friendly."

There are 2.7 million small businesses in the Lone Star State, according to the SBA, and about 40% are owned by people of color, among the highest rates in the nation. In Harris County alone, there are more than 90,000 Hispanic-owned businesses.

The key to recovery in many towns in Texas and across the country is small businesses, local leaders and experts say. But nationwide, nearly 7.5 million may be forced to close over the next five months, according to a survey by Main Street America, a program of the National Trust for Historic Preservation.

"It's a ripple effect, small-business owners generate revenue for the state, employ others in their community who utilize that money to put food on their table," said Janie Barrera, CEO and president of LiftFund, a Texas community development financial institution working with some of the local governments.

"When forced to close their doors for health and security reasons, that economic activity is paused or lost," she said.

Swift fallout

The economic fallout from the COVID-19 shutdown coupled with the crash in the oil and gas industry continues to reverberate. More than 2 million Texans have filed for unemployment relief since mid-March. Sales tax revenue in the state dropped about 13% in May, the largest year-over-year decline in a decade.

Before COVID-19, "there was a thriving economy of first-, second-generation folks running small entrepreneurial shops, paying their bills, feeding their families, but not necessarily in the banking system," said David Marquez, executive director of the economic development department in Bexar County, which allotted $5.25 million to a loan and grant program.

Many are self-employed or only employ one or two people. Like Corado, they might rely on a son or a neighbor to fill out their loan applications. They are the type of owners who might not have the time or fit the mold to readily apply for federal loan programs.

"By the time they even began figuring it out, other people had accountants, lawyers, bankers pushing them through the process, and our folks were stuck out," said Laura Murillo, president of the Houston Hispanic Chamber of Commerce.

An April report from the Center for Responsible Lending found that about 90% of businesses owned by people of color "stand close to no chance of receiving a PPP loan through a mainstream bank or credit union" for the reasons the local Texas officials cite: a lower likelihood of having a relationship with banks, a lack of digital skills, a distrust of government. The center was started with support from the Sandler Foundation, which provided most of the original funding for ProPublica and remains its largest donor.

A federal watchdog concluded last month that the SBA failed to direct private lenders to prioritize businesses in rural markets and those owned by people of color and women, as Congress intended. It didn't require the collection of demographic information either, which means the agency won't be able to know whom the loans went to.

Since the Inspector General's report, the SBA started to do webinars about the program in multiple languages, which some offices in Texas were already doing, according to Abell.

He said they are working with other groups including chambers of commerce to spread the word that there is still funding available, along with other resources small-business owners can apply for, and to encourage them to reach out to their local SBA office for help.

The pandemic is "accentuating the problem of why we should pay more attention to those small businesses from the standpoint of access to capital," said Al Salgado, executive director of the South-West Texas Border Small Business Development Center. "We need to really take a look at ourselves introspectively and look for those gaps, the cultural gaps, location gaps, high-risk areas."

A bumpy PPP rollout

Initially, Congress approved $349 billion to help small businesses, those with 500 employees or fewer, to help keep employees on company payroll and off unemployment.

The money was gone in two weeks.

Many large corporations, including some that are publicly traded, signed up for the program, requesting millions of dollars. A Dallas-based hotel network run by a prominent Texas Republican donor got $58 million. He returned the money after public backlash.

Gulf Island Fabrication, a publicly traded Houston company that makes ships and other heavy equipment for offshore oil and gas drilling, got $10 million. Last month, House Democrats asked that it return the money.

Last month, the Treasury Department ruled that businesses with access to other sources of capital weren't eligible for the forgivable loans and asked public companies to return the money.

The SBA has so far refused to release the full list of recipients. ProPublica is among a group of media outlets suing over the delay.

On April 24, Congress poured an additional $310 billion into the fund, but more than a month later, there is about $120 billion left.

After missing out during the first round, a pain-management therapist in Tyler was approved during the second round in April, but by then, he had let go of his two employees.

"Now the problem is I can't afford to bring back my employees yet, and 75% has to be used for employees within eight weeks of the time you get the money," the therapist, Kenneth Shepherd, said. Under the SBA's requirements, employers have to use three-fourths of the money to pay employees.

"This has been a joke, and most are in the same boat: Many got the loan while they were closed. This wasn't well thought out. … I wish I'd never applied for it."

The challenges extend beyond applicants. The SBA's Abell said his office has had to adjust daily to Congress' changes to the program.

"They keep amending it, trying to open it up for smaller businesses, minorities that haven't been able to be served because the bigger businesses were able to jump in on the program," he said.

Congress passed a bill adding flexibility to the loan program, including giving business owners more time to spend the funds and lower the share they have to use for payroll. The bill has gone to President Donald Trump for his signature.

Stepping in

Trying to address some of the PPP deficiencies, cities and counties across Texas created their own versions of the PPP, by partnering with groups such as LiftFund to administer the public funds in the form of small grants and loans of up to $25,000 with 0% interest, with payments deferred for three months. In the case of Harris County, the money lent is reimbursed if the business remains open after five years.

The agencies must report back to the local governments, which have oversight over how the funds were allocated.

"We wanted to have locals feel comfortable, to have access to a human being, to give small-business owners who may not be sophisticated with some of these federal programs the ability to not feel intimidated to access credit," said Peter Zanoni, city manager of Corpus Christi.

In every case, hundreds of businesses flooded the application process, requesting millions more than were available.

"It was really almost eye-opening when you saw 618 applications totaling more than $178 million in requests" for a $2 million program, said Jessica Herrera, El Paso's director of economic development. "It gives you a snapshot for the need that was out there."

Corado, the small-business owner from Harris County, has had no income since flights to her native Honduras stopped after its government closed its borders because of COVID-19.

From a small office in a strip mall in a largely immigrant and Hispanic part of Houston, clients drop off shoes, clothes, cellphones, important documents and other goods she personally delivers to their relatives in Honduras several times a week.

Honduran treats and snacks at the Oasis Express office in Houston on Monday, June 1, 2020.

She applied for $10,000 from the county to cover the rent and her utilities after depleting her savings of $4,000.

Corado, as did many in the immigrant community, learned about the federal PPP through Spanish-language TV news stories. She wrote down the website and handed it over to her son to help her apply.

She speaks English, but not enough to fully understand the legal and banking documents. While the PPP's first round opened April 3, sole proprietors like Corado weren't allowed to apply until April 10, six days before the first round of funding ran out.

When a second round of money was made available, Wells Fargo sent her a standard email saying it was continuing to process applications, but by then, she had been approved for the county loan and her son suggested it was best to leave it alone.

If the county loan hadn't been there, she said, she would have had to ask one of her sons for money or to borrow it from somewhere else.

Whether the local government's efforts pay off remains to be seen. Not only is the amount of funds available limited, but because it was first-come, first-served, it meant that it also favored those who were quickest to get their applications ready.

Garcia, the Harris County commissioner, said this was because he knew speed was critical to make sure that businesses about to close would get some support. "I didn't want perfection to be the enemy of the good. I knew we had to move fast."

Since May 1, the county has approved 177 loans totaling nearly $4 million.

"There are lots of people out there who need the money," said Robert Stein, a Rice University professor who has co-authored a book and several articles on federal assistance programs that included small-business loans and grants. "My question is, would this make an appreciable difference in the overall economy of Harris County? It will make an appreciable difference in some of these people's lives."

While in most places support for the programs was unanimous, in Harris County, the two Republican commissioners voted against it. One of them, Jack Cagle, declined an interview request through his spokesman.

Commissioner Steve Radack, the other Republican member, said it was an issue of fairness in how the program was rolled out and that it was forgivable.

"We should do what we can to aid those small businesses, but not on a first-come, first-served basis. There have to be other factors looked at such as credit, how a business was doing before this," he said.

"But in the rush to give away the money, a whole lot of people didn't get a shot in even submitting a loan application," he added.

That includes Pedro Cordero, who runs Curazao, what he calls a multiservice business where a mostly immigrant clientele goes in to do everything from getting documents notarized to buying car insurance.

Cordero didn't apply for either the PPP or the county's program. He said he didn't know enough about either and was told by his bookkeeper that he didn't qualify because he didn't use payroll. His four employees are contractors. The county's loan didn't have any payroll restrictions, and sole proprietors may qualify for the federal loan.

Meanwhile, he's lost 80% of his business as people are afraid to leave their houses and to spend on anything that's not essential. Families have stopped paying their car insurance and have delayed filing their taxes. Hardly anyone drops by anymore, he said from behind a plexiglass barrier he had installed because of the coronavirus.

When asked how he's been affected, he pulled a small sheet of paper where he was jotting down his monthly expenses. Salaries: $12,000. Rent: $2,700. Electricity: $700. The list went on. He estimated he needed more than $16,000 a month to cover expenses.

If business doesn't pick up, he is not sure how much longer he can go. "I don't even want to say." The business will continue, Cordero said in Spanish, but at best, it will be stagnant. He has been at that same spot since 1992.

Local governments are now setting aside some of the federal COVID-19 relief funds for small businesses in the form of grants. But now they are doing so with an eye toward equity to ensure some of those who need it the most have a shot at applying for it, acknowledging limitations from the initial programs.

In Travis County, officials are printing out applications and have a number where people can call directly for more information on the grants for those with limited access to the internet. In Bexar County, they are partnering with grassroots organizations that can do more on-the-ground marketing outreach.

For Corado, the Houston business owner, whether business returns is beyond her control.

Customers keep calling, asking when she will take packages again to Honduras, but all she can say is "not yet."

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Rice University has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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