Need money to keep your small business afloat? Here’s a how-to guide.

How can you, a small business owner, stay afloat during the coronavirus crisis? Here’s some advice from financial experts and some fellow business owners.

Customer picks up takeout from The Better Box.

Customer picks up takeout from The Better Box. (Courtesy of Tameka Bost)

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It’s hard to imagine the city without its small businesses: the bike repair shop on the corner, the family-owned grocery store down the street. But according to the Federal Emergency Management Agency, 40% of small businesses never reopen after a disaster. Twenty-five percent of those that do fail within the following year.

Is it possible to break that cycle now in Philadelphia? How can you, a small business owner, stay afloat during the coronavirus crisis? What resources can you rely on for information, funding, and support?

Here’s some advice from local financial experts — and from some fellow business owners.

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First, know your options

“I think small business owners, after they get over the challenges and the immediate trauma of what they’re going through, need to really focus on how they can save money immediately,” said Jim Burnett, executive director of the West Philadelphia Financial Services Institute. “Did you call your landlord? Did you call your lender? Have you called your utilities or your insurance company or any of your overhead costs, to see if you can reduce those costs at least over the next 60 days?”

The next step, he said, is making connections and locating external resources. Can you connect with a business association capable of lobbying public officials for support, or apply for emergency funding from the city or state? If you don’t have existing relationships with a bank, can you reach out to a community credit union or a smaller local loan provider?

“You should get to the point where you can start to assess, if the governor comes back tomorrow and says ‘OK, we’re going to open up,’ what is realistic for you. Will it take a month, two months, six months, a year?”

Part of that assessment includes being familiar with the financial options available: grants, federal aid programs, city funding, microloans. But for many businesses, it’s hard to know what to choose.

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The Small Business Administration’s Paycheck Protection Program, meant to help small businesses keep their workforces employed during the coronavirus shutdown, opened a second round of applications Monday. But while the concept of the program is good, the help that it provides is sometimes limited. That’s because big banks are required to use their own capital to make SBA-approved loans, so they usually offer aid via pre-existing relationships. And that, in turn, means that the smallest of businesses get left out of the deal.

“If you do not have a relationship with a bank, you’ve got to have tax returns, you’ve gotta have financial statements, documents on operations … and by the time you pull this all together, the funding is gone,” Nick Shenoy, president of the Asian American Chamber of Commerce of Greater Philadelphia, explained. It’s tough to get aid, he added, especially for family-owned businesses that may not be business documentation-savvy.

“Some of the restaurants are here to make money, but other [owners] are just here to survive … some of them are immigrants, some of them are not very well educated. Those businesses are in danger of not coming back.”

Harold Epps, former Philadelphia commerce director, told KYW Radio’s Cheri Gregg in a Facebook Live chat last week that small businesses need grants, not loans. And Kersy Azocar, senior vice president of microlending at the nonprofit financial institution Finanta, agreed. But for many of her clients, she said, applying for those grants just isn’t feasible.

“A lot of the grants go very quickly,” Azocar said. “By the time our small businesses are ready to apply, the money runs out.”

Plus, not everyone qualifies for the same aid. Undocumented business owners, without Social Security numbers or tax IDs, can’t apply for many of the grants and federal loans available, even if they’re producing profit and paying their taxes. Burnett said that’s why low-interest and forgivable loans are still critical.

“There will also be folks that can’t get grants, folks that are still going to need access to capital, and ideally you want that to be as low-cost as [possible] … somewhere that can be trusted to not take advantage of you,” he said.

Business owners should read the fine print, and be wary of high-interest loans that might require less paperwork. If owners take out a high-interest loan that they can’t reasonably pay back, for example, “that can put them in a really bad place, worse than if they hadn’t taken [the loan] at all.”

Be prepared (and seek out help)

So how do you figure out which option is best for you, and how to get it?

That’s the question Azocar’s clients need to answer. As small business owners, they run bakeries, mechanics shops, grocery stores — and face a similar variety of potential barriers to application.

There’s language access, for example; Finanta’s portfolio “is composed of a lot of immigrants — from Latin America, Indonesia, West Africa — and English is not their first language,” she said. Or technological barriers, since it’s hard for many clients to upload documents, scan signatures, or fill out forms online. Sometimes, it’s simply an issue of information: ensuring that they can make use of government assistance, that they qualify for aid, and that they should apply.

Since the coronavirus shutdown, Finanta has been running ongoing online workshops, in both Spanish and English, in partnership with the Community First Fund, the Philadelphia Hispanic Chamber of Commerce, and Widener University. Philadelphia Industrial Development Corp., in collaboration with Lendistry, has hosted a series of free PPP-focused webinars, as has the Philadelphia Alliance for Capital and Technologies and the Pennsylvania Chamber of Business and Industry.

“Our first step is to get [clients] immersed in what’s going on, what assistance they can get connected to, asking if they need access to food pantries, making them aware of scams,” said Azocar. “Our second step is one-on-ones, where we encourage them to apply … and that also takes a lot of follow-ups. It takes a lot of hand-holding, and that’s something we typically do with our clients.”

So far, Finanta’s methods have met with success. For the first round of PPP funds, the lender helped its clients submit 10 applications. All 10 were approved. When the second round opened Monday, the organization was more prepared: as of Tuesday evening, it had submitted 30.

Other business owners are taking that education into their own hands.

“The minute the governor told us that we would have to close, I called salons and business owners to see how they were making out, what we’d have to do moving forward,” said Ann Turner of Hair Du Jour, a salon in West Philadelphia. She organized a group within the 63rd Street Business Association on March 16, the day Gov. Tom Wolf announced closure of all nonessential businesses. She’s been in close communication with the other businesses on her corridor ever since.

When PPP came out, they filled out applications together; this week, they had a shared Zoom call about financial literacy.

“We’ve been sharing with each other who’s being denied for grants, who’s being awarded … also dealing with the fact that some people are not financially doing well, giving them emotional support,” Turner said.

Small business owners need to be proactive, she said. “We feed ourselves. If you’re self-employed and you don’t work, you don’t eat.”

But that doesn’t mean you’re in this by yourself.

Find your community

The city’s minority-led chambers of commerce have hosted virtual town halls, sent out surveys, and even started takeout initiatives to encourage Philadelphians to support their local restaurants, which have taken a major financial hit in the past month.

Shenoy, who’s in the process of launching an #PhillyAsianEats initiative, said he’s particularly concerned about family-owned restaurants.

“Other businesses can survive for a couple months, because their profit goes up and down. The restaurant [sector] is not an up and down. It’s down, down, down. Forty percent of businesses don’t come back up in these situations … you’re going to see a lot more empty restaurants after this is over.”

Zach Wilcha, executive director of the Independent Business Association, which represents LGBTQ+-owned businesses in the city, said it’s a matter of providing businesses with enough cash to bridge the gap between “the future” and “the right now.”

“We know that when people are faced with disaster, it’s not great for business … so we’re making sure they have enough capital to make it from one point to the other,” Wilcha said.

In the meantime, he’s looking to other solutions as well.

“What would be incredible is if there were some kind of statewide legislative effort to make sure they could take care of their physical space, in terms of overhead,” he said. “Rent deferral, utility deferral, anything like that, that would help [business owners] keep more capital in their business where they need it.”

“There are so many unknown quantities to this, and it’s difficult to formulate any sort of plan that works for everybody. We have to work business by business, and day by day, to make sure that people are surviving.”

Make the hard choices

Some business owners, like Better Box’s Tamekah Bost, didn’t receive funding but are still  operating.

“We applied for every single thing that was out there that we could apply for, but we haven’t received a single dime,” said Bost. Better Box wasn’t approved for a PPP loan, or any of the city’s grants. “Those relief funds ran out before they were even out of applications — so God bless anyone who got it, but we didn’t get it.”

Without the funding, Bost couldn’t afford to close and retain her staff. So instead, she opted to reopen.

“A lot of things changed for us rapidly,” she said. “We had to rush to hire in-house delivery drivers, we opened a pickup window … we were very nervous that first week, but what we realized was that our business wasn’t declining. The first week, we were scared. But the second week, our customers overwhelmed us with support. We ran out of food. … The love was so overwhelming to us, I caught myself crying at the end of the day.”

Bost calls herself blessed by her customers, and she’s happy Better Box can keep operating. But, she said, it’s different for every owner.

“The restaurant business has a lot of overhead, and your profit margin is typically small — you have to weigh out what makes sense for you. If your overhead is going to kill you, then it makes sense to close. If you can open, do so, but make sure that your employees are safe, make sure that you take care of your people.”

“I don’t expect the business to be usual,” said Sang Kee owner Michael Chow, who owns two restaurant locations — one in Chinatown, one in University City. He’s preparing to open the latter on Friday, with some trepidation; after all, the restaurant’s been closed for nearly two months.

He’s applied for PPP funding, but hasn’t heard back yet on approval. Still, he’s moving forward as best he can. And even if he does receive the funding, he thinks he’ll still need help after the two months of support it offers.

He’s not the only one. Oswaldo Quintero, owner of Triumph/Jigsaw Exterminating Services & Supplies, did receive both city relief and PPP aid, thanks to help from Finanta. Although pest control is technically considered an essential business, he chose to close his business for a couple weeks to keep his staff and technicians safe. Those couple weeks turned into a couple more, and then more, as the novel coronavirus spread.

“I drain my savings, business and personal savings, to pay my employees,” Quintero said. “Finanta, they helped me like angels in this situation. … There is so much information they request, so much documentation they are asking for, it’s really hard for anyone to have that information at the same time all together.”

Monday was his first day of operation in six weeks. He’s busy — his call with WHYY was interrupted nearly constantly by various new tasks as his staff hustled to fill demand. And he’s  hopeful.

“It’s going to be a challenge,” he said. “But we have to move forward.”

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WHYY is one of over 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push towards economic justice. Follow us at @BrokeInPhilly.

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