Small business owners are finally starting to see some of the federal bailout money that was included in the $2 trillion CARES Act. And while Vermont did pretty well during the first round of federal loans, business owners are wondering if there will be enough help to stay open as the COVID-19 pandemic drags on.Chris Donnelly owns Sugar Tours, in Dover, a company that puts travel packages together for schools and out-of-state groups. He figured out pretty early on that the coronavirus was not going to be good for the travel industry.
“As soon as it hit the West Coast, I had already laid off one person,” Donnelly said. “And then my biggest client had called me and said, ‘We’re ceasing all of our European and overseas operations.’ And I was like, ‘Uh-oh.’ So then I cut another one, because I just had that feeling like it’s going to move here pretty quickly. And it did.”
Before all of this, Donnelly had three full-time employees, plus another dozen part-time. He was just getting geared up for the busy season before the pandemic shut everything down.
“We went from a good April, and a really good May, to zero — to everything gone in a month-and-half's time,” he said. “So it’s a big hit.”
"We went from a good April, and a really good May, to zero — to everything gone in a month-and-half'stime. So it's a big hit." — Chris Donnelly, Sugar Tours
The federal government’s Paycheck Protection Program, or PPP, gives business owners like Donnelly a little time to try to figure out a way to survive the pandemic. If businesses use at least 75% of the federal money to keep people on the payroll, then the cash doesn’t have to be paid back.
The Small Business Administration approved almost 7,000 Vermont businesses for more than $1 billion in payments. That's is the third highest per capita approval rate in the country according to Vermont Bankers Asociation president Chris D'Elia, who shared the numbers with state lawmakers last week.
Donnelly just found out that he was approved for a loan, but he said he knows there are some tough times ahead.
“I’m very skeptical of what’s gonna happen here,” he said. "I’m just looking at how slow it’s been getting to this first phase. You know, if I get approved for this one loan and it’s not enough, is there going to be a second round of stimulus? And it’s pretty scary, when you sit back and you’re trusting that it will be done, and it’s not getting done.”
"I will tell you this: It is not a boring time to be a community banker."— Dan Yates, Brattleboro Savings & Loan
A lot of the confusion around the federal bailout package happened because local banks were asked to process loan applications without clear guidelines from the federal govermnent.
Brattleboro Savings & Loan president Dan Yates said the process has been ironed out and the money is now being distributed.
His bank usually does about $10 million in business loans a year, but Yates said he'll give out more than that in emergency loans in just the next few weeks.
“I will tell you this: It is not a boring time to be a community banker,” he said.
Even before the coronavirus shut down Vermont’s economy, Yates said a lot of small business owners were struggling to compete with online companies. And while the federal bailout money might help keep a business afloat, he said it will be a very long time before the economy is at full strength.
“I think that we are going to see a fundamental change in a lot of retail businesses and how we do retail business,” Yates said. “And I’m not sure how many storefronts in Brattleboro and other main streets around our state and country are never going to be reopened.”
Greg Davis does hope to reopen his store, Autumn Records, in Winooski. He's receiving about $12,500 from the federal government, which will pay for him and his two employees for about two months.
Davis said he’s selling more records online, and doing some local deliveries, but he’s got rent to pay, and inventory to keep up on, and the loan will only go so far.
“I think it’s good for now,” he said. “I don’t know how sustainable it is. But, you know, I think for a few months, we can probably weather that with just doing online sales. But as a long-term strategy, it’s a little more difficult.”
The challenge for people like Davis is balancing all of the dreams and hard work that any small business owner has to put into a company, against the bleak financial picture a post-COVID-19 world will present.
Brattleboro Development Credit Corporation director Adam Grinold said his group has been helping business owners decide whether adding debt at this point is the best move. When the pandemic is over, he said consumers might be gun-shy, with very little money to spare. Or, there could be a windfall from all of the pent up demand.
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Grinold said it’s probably best for business owners to prepare for both scenarios.
“No one has the game plan on how to do this right now, right?” he said. “So because we don’t know the continued severity, we don’t know the duration, it’s going to critical that individuals who choose whether to continue invest[ing] in their business will be able to make it through to other side.”
Brattleboro Savings & Loan is a VPR underwriter.
