As the country inches to some sense of normalcy, small businesses — especially minority-owned companies — are still struggling to recover from the pandemic’s financial gut punch.
Shutdowns during the early days of the pandemic and keeping pace with public health orders wreaked havoc on mom-and-pop businesses’ bottom line. Even as businesses open up, mask restrictions loosen and more people are vaccinated, cash registers are not ringing as much as some people still fear venturing out into crowded stores.
But financial help is available.
The Legacy Redevelopment Corp, a community development financial institution, has been awarded a $1 million grant from the city of Milwaukee to offer forgivable loans to small and for-profit businesses hurt by the pandemic.
“There are still small businesses trying to stay afloat,” said Terese Caro, president and CEO of Legacy, which specializes in urban lending to small businesses. “They’re not quite where they were prior to the beginning of 2020. This loan has been put into place to continue to try to assist small businesses.”
Business owners can apply for loans of up to $20,000 which can be used for working capital, including buying personal protection equipment like plexiglass shielding for businesses to safely operate. The loans also can be used for payroll, rent, mortgage, inventory, or equipment. Owners can apply for loans even if they received other financial assistance from the state and local government.
The loans are forgivable after six months if businesses meet certain criteria. Owners must show how the money was used and show if personnel remained the same at the time of the loan, or if owners created new positions or rehired workers.
“It’s creation or retention,” Caro said. “So, you either keep who you have, or you bring on new people. After that six months, if you are able to demonstrate that, the loan is forgiven.”
Though businesses are eager to reopen, finding employees has been the biggest struggle. Some people remain reluctant to return to work for fear of catching the coronavirus while higher unemployment compensation makes it harder for companies to lure workers back.
“Some people are making out better staying at home than they were at work,” Caro said. “So, some people aren’t ready to come back into the workforce. That’s been an issue.”
This loan, she said can help businesses address staffing needs as more shops open.
“These businesses have been running half or three-quarters of what they’re used to running over a year and a half now,” she said. “That is a lot to catch up. So, you are still behind the eight ball with trying to get in front of some of this stuff.”
The grant money is part of last year’s federal CARES Act and a byproduct of the fallout from the first round of the payroll protection program.
In the initial rollout, small business owners were overlooked while larger ones took full advantage of the program, quickly depleting the money. Outcry over how funds were distributed forced many to return the money.
Related:Search Paycheck Protection Program loans given to Wisconsin businesses
Additionally, small businesses weren’t serviced by bigger banks because of greater incentives to do larger loans, Caro added. In response, the Small Business Association and US Treasury department set aside money for organizations like hers to help small businesses take advantage of federal dollars.
Legacy hopes to service at least 35 to 40 small businesses through this loan program.
“As PPP funds are coming to a close, for the most part, there are still people who are looking for financial support … [and] who would need it,” Caro said.
Deshea Agee, of the Historic King Drive Business Improvement District #8, said any financial support is helpful because the pandemic greatly affected small businesses in his district.
Many cut hours and staff to stay afloat while the pandemic hampered expansion plans for others. Sadly, he noted, the district saw two businesses close, Center City Wellness and Creative By Design, an interior décor company. Other businesses are operating at least 80 percent.
And while businesses in his district have been resilient and creative in ways to stay open and service clients, any financial relief is welcomed. There are several pots of money out there including up to $50,000 financial assistance from the Greater Milwaukee Foundation to help business owners. Entrepreneurs, Agee said, can leverage these different resources to grow, sustain and even reopen their business.
“The way that the funding can be used, I think is very broad. It is working capital; it’s equipment; it’s improvements,” he said. “So I think that the level of funding gives businesses some assurance that they can weather this storm they’re in right now in a way that they can come out on top.”
Though some businesses may be reluctant to take on extra debt, Caro said the parameters of the loan are not that cost-prohibitive if the business can’t meet the forgiveness requirements. Businesses have five years to pay the loan off at 6 percent interest.
“As businesses open back up, and revenues are coming in, this money is like an extra support to make sure that things are sustainable for the businesses,” she said. “I don’t think it would be a hard obstacle for the borrower to satisfy the requirements of this loan.”
For more information contact Terese Caro at 414-343-3091 or [email protected] or www.lrcmke.com.
