Kansas City’s Small Business Owners Anxiously Await Coronavirus Emergency Loans
Nicholas and Kristen Rowell became owners last October of the Little Monkey Bizness children’s play space in Shawnee, Kansas, and had parties and playdates booked solid through April. Then coronavirus hit; they shut down the business on March 16.
Now the Rowells are among the hundreds of thousands of small business owners seeking emergency financial relief because of the COVID-19 pandemic. They began applying April 3 for small business loans under the federal CARES Act, a new law that tries to help employees and businesses recover from economic devastation.
The short-term cash assistance can help with payroll, rent, mortgage interest and utility costs. Principal amounts can be forgiven during the first eight weeks after the loan was made, with proper documentation on eligible uses for the money.
“It’s definitely given us light at the end of a very dark tunnel,” Kristen Rowell told KCUR.
But there’s no clear indication of how or when the assistance will come through.
“It’s a temporary program that if properly administered can really be a lifeline to small businesses,” said Kansas City lawyer Mark Untersee. “The difficulty is the rapidity at which it’s come on and the rapidly changing environment, both the regulatory and the banking environment. This isn’t something that any of them had a platform ready to go.”
He said banks are scrambling to figure out what they’re doing at the same time the borrowers are trying to figure out what they’re supposed to do.
“The combination of those things creates difficulty,” he said. “It’s no one’s fault.”
Nicholas Rowell said he applied for the Small Business Administration assistance as soon as the application was available and followed the advice to reach out to his bank. But as of April 6, he hadn’t heard back yet.
“The banks are overwhelmed. It’s a waiting game,” Kristen Rowell said, adding that they hope to get emergency funds soon and reopen by June 1.
Like the Rowells, Jessica Moler said her business had been doing well before the virus struck.
Moler and her partner had just moved their Hand & Land shop and spa from Leawood, Kansas, to Midtown Kansas City in late February. They were delighted with their new location until they had to shut down for Kansas City’s March 24 stay-home order.
“We had some really good momentum,” she said of the move to Midtown. “March started out so good.”
In addition to selling eco-friendly health and beauty products, the new Hand & Land space had five practitioners who sublet rooms for acupuncture, massage and facials. Since late March, Moler has switched her efforts to selling products online, but the spa operation has ceased.
She said her partner has filled out a loan application and reached out to Mazuma Credit Union but not heard back. They are seeking help to pay rent, payroll, utilities and myriad business fees that continue to add up.
Help with the process
The pandemic has been enormously destabilizing for businesses throughout the metro area.
Untersee said Monday that he’s worked on about 50 applications for small businesses seeking loan help through the CARES Act. Businesses seeking his help have ranged from restaurants to small plumbing contractors to parts suppliers, with nearly every industry affected by the coronavirus impact on the local economy.
He advised that it’s easier for small business to work through a lawyer, or with a bank with which they already have a relationship.
“We’ve actually already filed on a number of clients, and we expect funding on those applications in the next two days,” Untersee said, adding that it takes some expertise to navigate this new program. “We’re working with banks all over the country.”
At the Greater Kansas City Hispanic Chamber of Commerce, businesses have been calling nonstop to ask about the loan assistance program, and to get help with Spanish translations.
“This thing is coming so quick, so fast, and there’s a lot of confusion,” Hispanic Chamber President Carlos Gomez told KCUR. “They are worried about the money running out.”
The CARES Act provides $349 billion nationally for small business loans but many believe the need and demand will be far greater.
Gomez said the best-equipped businesses have a good accountant and attorney, but his organization is trying to serve as a resource. It has held several webinars to connect members directly with Small Business Association representatives. More information on those webinars is available at https://hccgkc.com/
Local relief fund
Kansas City donors, meanwhile, have come through with some funding. A $5 million small business coronavirus relief fund was launched by AltCap, a community development financial institution that invests in underserved communities. The $5 million was supported by the Greater Kansas City Chamber of Commerce, Kansas City Area Development Council, Civic Council, and Ewing Marion Kauffman Foundation.
Within 72 hours of the fund being announced, AltCap had 600 applications with $30 million worth of requests, according to President Ruben Alonso. The agency has approved several loans and is working through the huge backlog of requests, trying to get the money out as soon as possible.
Alonso said they are providing loans of up to about $50,000, to try to stretch the fund as far as possible, while continuing to seek additional contributions from donors. They are particularly trying to help small retailers, restaurants, barbershops and other types of businesses that were hit particularly hard by the stay-home orders.
“Our goal is to do what we can with what we have with this local effort,” he said. “What we’re really looking for is for banks to help support, providing us loan capital so we can lend to small businesses.”
Lynn Horsley is a freelance writer in Kansas City. Follow her on Twitter @LynnHorsley.