Employers in the Springfield area say they’re starting to put their funding from the coronavirus relief bill to use.
The main priority for many is to continue paying employees or bring back furloughed staff, though others say the money isn’t enough to help them through the COVID-19 pandemic.
The U.S. government originally earmarked $349 billion of the $2.2 trillion Coronavirus Aid, Relief and Economic Security Act to cover payroll costs, rent and utilities for small businesses, but the program ran dry two weeks after applications opened. The Small Business Administration announced a second wave of program funding – about $310 billion – was available beginning April 27.
At Tomo Drug Testing, company executives Mickey Moore and Angela Garrison said in a statement to Springfield Business Journal that the company had to furlough seven corporate employees and reduce the hours of 14 staff members. Since receiving their PPP funding, they’ve been able to reinstate employee hours and have brought back all but one employee from furlough by press time.
“The PPP is helping retain staff and assist with short-term cash-flow needs,” the statement read. “However, intermediate and long-term revenues and staffing will depend on clients returning to work and resuming testing programs.”
Tomo Drug also applied for the SBA’s Economic Injury Disaster Loan, which would provide the company a safety net in case revenue and testing doesn’t recover quick enough. The loan is up to $2 million and a loan advance is available at up to $10,000 to cover revenue losses and other pain points, according to the SBA. Tomo Drug Testing had not received the funding by press time.
Originally, borrowers weren’t able to utilize both the PPP and disaster loans, but the SBA has outlined that borrowers can use both loans as long as the money doesn’t go toward the same effort, such as payroll costs. The SBA currently is not accepting additional applications for the EIDL because of available appropriations funding, according to its website.
At least 75% of the PPP loan funds must be used for payroll costs and the remaining 25% has to be used for approved costs, such as rent, utilities or mortgage payments, according to the SBA website. If not, it’s possible none of the loan will be forgiven.
At H Design Group LLC, principal architect Rob Haik said the company is following those guidelines with its over $200,000 PPP funding.
“With us having 22 employees, it gave us the coverage we need for this awkward moment,” he said of payroll costs, noting the architecture firm has not furloughed any staff members.
Haik said about half a dozen clients tabled their projects in March because of COVID-19. But since then, a separate half-dozen clients have brought new projects to the table because they also had received financial assistance from the coronavirus relief act.
“If things weren’t getting better, August is when we would have had to start making difficult decisions. Worst case scenario is we’d have to furlough employees,” Haik said. “This has given us an opportunity to see what expenses are a need and a want … and tighten the belt a little bit.”
At Boys & Girls Clubs of Springfield Inc., CEO Brandy Harris said its $425,000 PPP funding has helped keep all 96 employees on staff during a time the nonprofit typically hosts its largest fundraisers. The annual Steak & Steak dinner, which generated roughly $500,000 last April, is postponed.
“We have had to shift massively,” she said.
The nonprofit has since developed virtual programming with club members, operated a COVID-19 helpline and created a food distribution operation at three locations, all of which she said would be very different without the payroll funding.
Greg Walker, owner of the local La Quinta Inn in south Springfield, received PPP funding during the first wave of approvals but said it’s created a quandary.
“It’s not enough,” Walker said. “Seventy-five percent has to go to payroll, and we don’t have that much need for payroll right now because we don’t have that much business.”
On average, he says the hotel has up to 80 rooms occupied daily, and now, they’re occupying 20 rooms on a good day.
Walker said he’s bringing back some of the furloughed housekeeping crew and finding ways to put them to work, though there’s not much to go around. He originally furloughed 14 of his 18-person staff, and with the PPP funding, eight team members currently are back on board. He says he wants the loan to be forgiven, so he’s also utilizing 25% of the funding for utilities and rent.
“It’s helping offset some of the payroll costs we do have because we need someone at the front desk 24/7,” Walker said. “But over this last month, we lost $100,000 in revenue year-over-year, and this month will probably be another $130,000. It’s crushed our budget.”
The real help to his business will be increased tourism funding and if people begin traveling again. As a member of the Missouri Hotel Lodging Association, Walker says he’s planning to address Gov. Mike Parson’s office about finding ways the Missouri General Assembly can increase tourism dollars. Parson proposed cutting $6.4 million from tourism efforts at the beginning of April.
“It will probably be next spring and summer before business goes back to normal,” Walker said. “But maybe people will surprise me.”
The American Hotel & Lodging Association reported April 27 the average small-business hotel will need additional funding under the PPP to rehire employees or prevent more layoffs, according to a news release. The association reported the approved expenses in the coronavirus relief act only cover 47% of hotel operating costs.
At 417 Travel, co-owner Travis Paquin says the main concern for his business isn’t obtaining financial assistance. It’s waiting for the travel industry to resume.
“We’re wishing for something so much greater than a little bit of financial help,” he said. “The only thing that helps us is that you can get on an airplane.”
Paquin said the company received a $5,000 EIDL loan advance and is applying for the second wave of PPP. He said he’s using the EIDL loan for utilities, rent, internet and salaries, and he’s prepared to dip into savings to keep his employees staffed.
“We have the financials in place to keep this business open,” Paquin said. “The worst thing I could do is not be prepared when the markets open back up. We’ll wring every nickel and dollar we have to be prepared when travel is ready.”
A baked goods vendor at Farmers Market of the Ozarks expanded to a brick-and-mortar operation; the first lending center for Old Missouri Bank opened; and London Calling Pasty Co. added a new food truck.