Southwest businesses, banks navigate emergency loans

Lyn Williams, of Brown & Greene Floral in Linden Hills, is one of several Southwest business owners trying to navigate emergency loan programs during the coronavirus pandemic. Photo by Isaiah Rustad

A wave of new federal and state loan programs designed to help small businesses badly wounded by the coronavirus pandemic is offering both relief and confusion to companies in Southwest Minneapolis.

With the federal Small Business Administration (SBA) and Minnesota Department of Employment and Economic Development (DEED) offering emergency relief options, many small business owners, desperate for aid and worried funds will be exhausted, are rushing to apply for the programs as quickly as possible, even if they are not quite sure about all the details.

“It’s been insanely time consuming and confusing,” said Lyn Williams, who runs Brown & Greene Floral and Wax Paper in Linden Hills.

Businesses across Southwest Minneapolis are facing uncertain futures due to the pandemic and while emergency forgivable loans offer needed relief, the process is creating many questions for stressed merchants.

“I have applied for everything on the days they have come up and haven’t heard anything back other than, ‘I’m in line,’” Erica Gilbert, who owns Bryant Lake Bowl in LynLake, said on April 8.

The $2 trillion federal coronavirus relief act, signed into law on March 27, included a $349 billion Paycheck Protection Program (PPP), which offers businesses forgivable loans to keep workers on the payroll and cover major expenses like rent. The SBA is also offering emergency disaster loans with low interest rates and broad eligibility, which include up to $10,000 in forgivable grants.

The state is also offering small business emergency loans to companies that closed due to Gov. Tim Walz’s executive orders; they’re partially forgivable and have low interest rates. On April 3, the city of Minneapolis rolled out gap funding for hard-hit impoverished areas and lowered interest rates on small business loans citywide.

In the midst of a crisis, local businesses are sorting though all of these programs and trying to pick the best option.

“It’s a lot of information and no one really knows [all of it], even the government who is putting it out,” said Amanda Olusanya, proprietor of James Irving Grooming in Uptown.

“[We’re] educating our clients about how it works while we’re trying to figure out how it works ourselves,” said Nick Place, chief lending officer with Bridgewater Bank, a midsize community bank with an Uptown branch.

Application rush 

For banks, the rush of clients applying for PPP loans when they became available on April 3 has required all hands on deck. Banks knew the PPP loans were coming but weren’t sure what the SBA was going to ask of them for implementation until the night of April 2, Place said. Once the guidance came, things kicked into high gear.

If the borrower uses the loan correctly, allocating at least 75% to payroll and meeting other stipulations, the loan will be forgiven and the government will essentially pay the bank the principal amount outstanding. Banks originate the loans, which the SBA has given a 100% guarantee.

Once the application was available, Bridgewater Bank had several clients reaching out saying they wanted to apply and giving the bankers their forms. But it’s a bit more complicated than that, Place said, and bankers need to work with clients to calculate the right loan amount. Social distancing guidelines mean this is all done using Excel spreadsheets and applications like DocuSign. Once the banks have the information, bankers get the loan approved internally and enter the information into the SBA’s website. From there, the SBA can approve the loan quickly and issue a loan number, essentially allocating the money, Place said.

Bridgewater Bank started entering information into the SBA’s website the morning of Sunday, April 5.

“Now we’re at a point where we’re trying to crank through these as quickly as we can,” Place said.

Sunrise Banks, a local firm with a Whittier branch, has received more than 1,000 applications for PPP loans since April 3, according to CEO David Reiling. Both banks are processing loans for existing and new clients.

“I think it’s important to keep in mind that a relief package of this size is unprecedented — we’re doing our best to keep up but we don’t have all the answers,” Reiling said in an email. “This is a novel program that’s new to everyone, including us.”

Getting 100% of the loan forgiven requires companies to be paying at least 75% of February 2020 payroll to employees by June 30.

“One of the things we’re trying to work with our clients on is, ‘Do you realistically think you can hire your staff back?’” Place said.

Both banks have had staffers working well into the evening and on weekends trying to process the applications and help clients navigate the programs.

“It’s a big lift,” Place said.

Choosing a plan 

Hair salons have been completely shuttered since the governor’s March 17 order, making business impossible for local shops like James Irving Grooming. Since the crisis closed shops, Olusanya has been getting a barrage of emails about different loan options from the state, from professional salon groups and from women-owned small business groups. When the SBA loans rolled out, she applied for both a disaster relief and PPP loan right away.

The applications were fairly simple, Olusanya said, but deciding what to apply for was not. When she did apply, she didn’t receive a confirmation number immediately.

“It’s kind of a hurry-up-and-wait situation,” she said.

As of April 13, she doesn’t know if James Irving’s loan has been approved.

Sunrise Banks has told clients it is not sure when applications will be processed. The bank is giving out confirmation numbers to applicants and letting people call Sunrise’s PPP hotline to check the status of the loan.

Bryant Lake Bowl — a bowling alley, cabaret theater, restaurant and bar rolled into one — has been closed since before Walz’s initial March 17 order. Most of Gilbert’s 50-employee staff has been laid off, though she is continuing to pay for their health insurance throughout the shutdown. The business is selling gift cards and has a donation page for staff on its website. Gilbert has applied for the PPP loan and state emergency loans through DEED but had not heard back on those loans as of April 13.

Luckily, Gilbert said, the establishment’s landlord has been very helpful and understanding. The Theater of Public Policy, which regularly hosts shows at Bryant Lake, received permission to keep recording its shows at the theater as long as the host is alone. Other shows have, of course, been canceled and knowing when to reschedule remains a challenge.

Florists like Brown & Greene do not qualify for DEED emergency funding because they are not closed due to state order, which Williams found frustrating. She applied for an SBA emergency loan right away and later applied for the PPP loan — though she said the stipulations about when she must rehire staff are confusing and could be hard to meet given the uncertainty of future business. She said the federal government boosting unemployment insurance by $600 a week during the crisis means it might make more sense for many part-time workers to stay on unemployment rather than coming back to work.

Initially flower shops were not allowed to be open under the governor’s executive order, but were later granted permission to do business, which excludes florists from the state emergency loans. Now Williams is working alone and while she did a decent amount of business around the Easter holiday, changes in supply chain have made it hard to get flowers from markets like Holland. She’s been assembling floral arrangements for pickup and said customers are mostly buying flowers for birthday gifts, as sympathy messages or “to brighten someone’s day.” Being busy “is both a blessing and a curse,” Williams said. She’s unsure if the business will be running at full strength by Mother’s Day, traditionally her biggest day of the year.

“That’s going to be a kick in the pants,” she said.