Some of the billions in aid offered to virus-challenged small businesses is sitting in the accounts of Tech Squared, a Roanoke IT firm. Co-owner Sean Peters needed about four hours to apply, and the loan for his nine-employee company arrived in four business days.
The money Tech Squared received came as a low-interest loan equal to two and a half times the company’s monthly payroll, the standard benefit under the Trump administration initiative called the Paycheck Protection Program.
The money is mainly for keeping pay and benefits intact through June 30, although a portion of it can be used for rent and utilities.
The government has said loans spent within those program guidelines will be forgiven.
Otherwise, recipients will repay over two years at an interest rate of only 1%. It’s a temporary lifeline to cover core expenses and is available to for-profit and nonprofit enterprises with fewer than 500 employees.
Peters’ IT firm hasn’t been hammered by the virus emergency the way restaurants and entertainment venues have been.
The work of managing, troubleshooting and repairing client IT systems is steady, especially now that employee remote access is mission critical. But the virus emergency is depressing the portion of his business devoted to IT projects, involving the sales and installation of equipment, Peters said.
The money will help deliver what clients need and buffer him in case one of them can’t pay Tech Squared, he said. He still rates the business climate as highly uncertain, possibly for months to come.
“But there’s a higher confidence that the short-term effect of this storm is going to be weathered,” said Peters, who declined to give the expected size of his loan.
The virus emergency imperils half the small businesses in the country, Goldman Sachs said after a survey of 1,500 business owners.
“If you are a small business, contact your bank now. This is an incredible lifeline for your company, and you should take advantage of it,” wrote Atlantic Union Bank CEO John Asbury in commentary Wednesday.
Peters’ smooth experience entering the program may not be the norm, as Asbury’s article cautioned that surprises and delays are possible. Critics have argued that the $350 billion program was rushed out the door, and some businesses have reported difficulty finding a bank willing to assist them.
A long list of banks and credit unions say loan processing has moved to the forefront as a priority. Some, such as SunTrust, are taking applications only from entities who were already bank clients as of Feb. 15.
“We can’t make ventilators. We can’t open up a laboratory and study the coronavirus, but what we can do is help businesses that are impacted financially from this pandemic,” said Scott Steele, head of Bank of Fincastle.
The bank is processing applications from bank clients and can serve non-clients as well if they open deposit accounts, he said.
American National Bank & Trust of Danville, which assisted Tech Squared, is glad to “work with small businesses and to have some small part in trying to help them regain their footing during such a terrible crisis,” said Kevin Meade, its Roanoke-based regional president.
Bank of Botetourt, another bank making the loans, decorated its website with a hand offering a check beside a link to program details.
Applicants must certify that the loan is a necessity, but almost every enterprise faces the uncertainty of not knowing when states will lift their stay-at-home orders.
Luna Innovations in Roanoke hadn’t laid off any of its nearly 300 employees and on Thursday didn’t foresee doing so, but it applied for the full loan possible — in the $4.5 million to $5 million range — in case sales slump.
“I don’t know what’s ahead of us, I only know what I see now, so it behooves me to take advantage of a loan that I can get,” said Scott Graeff, CEO of the company that offers fiber optic-based test and measurement products and services. “They’re loaning you the money and saying, ‘We want to make sure you’re OK.’ ”
Roanoke Ballet Theatre is losing ticket sales due to the postponement of performances and is receiving less tuition from its dance school, which saw only a portion of its students stay when classes moved online.
Without a loan, some of its two full-time and 15 part-time employees are likely to be laid off, Executive Director Sandra Meythaler said. Since her dancers come from other places in United States, they might return home and later be difficult or impossible to lure back, she said.
With a loan, workers will get paid, even if there is nothing for them to do, she said. She has a monthly payroll of $11,000 and is expecting $27,500 from the program.
The point behind the project is to protect workers “who are victims of something completely out of their hands,” Meythaler said. “They are not working not because they don’t want to.”
Her dancers dance at home to stay in shape, tuning up for the performance calendar when it resumes. “Sleeping Beauty” at the Jefferson Center was moved from June 6 to Aug. 22, she said.
The idea of taking government funds to pay idle workers didn’t sit well with Travis Powell, co-owner of Valley iRepair, which services Apple products.
Powell, who said his business is down 60%, plans to use his loan proceeds to keep his Roanoke store near Towers Shopping Center open while his Blacksburg store is closed. He declined to provide his loan amount.
It will be enough to pay employees who are still on the job, though not the several on furlough, he said.