The future for many small businesses across the Chicago area, and across the country, is unclear.
To create some security, the federal government has stepped in with $349 billion in loans for small businesses.
But the programs have had a bumpy start. Many business are nervous the funds might be exhausted before their loans even get approved. And the timeline for distributing funds is unclear.
“Most of what the federal government is offering are loans, but while everyone is happy to have some level of options, loans are not necessarily the best option,” said Rob Karr, president and CEO of the Illinois Retail Merchants Association. “If you don’t know when you’re going to open, you’re taking on more debt you don’t know when you can pay off.”
Robert Steiner, district director for the Small Business Administration’s Illinois District Office, explained the three prongs of what the federal government is offering to small businesses:
It’s essentially $349 billion for all businesses in the country to apply for on a first-come, first-served basis. Under that, there’s the Paycheck Protection Program which offers loan forgiveness for employers. Next is the Economic Injury Disaster Loan Emergency Advance, which provides up to $10,000 in economic relief to businesses that are currently experiencing temporary difficulties. Last is the Small Business Loan Subsidy Program, which pays for the principal, interest and fees for some loans.
“This is a real opportunity for [the federal government] to help employers and also employees,” Steiner said.
Last week, President Donald Trump said the loan distributions were “way ahead of schedule” and that the program has “been flawless.”
“If he meant flawless in terms of rollout, we would respectfully disagree,” Karr said. “It’s been hard to access the [Paycheck Protection Program] and many community banks have had difficulty getting involved.”
Karr is hopeful small businesses will be able to bounce back.
“With this, it’s a pandemic; there was nothing structurally flawed in the economy before this like 2008,” Karr said.