PROVIDENCE, R.I. (WPRI) – While thousands of individual Rhode Islanders are filing for unemployment each day because of COVID-19, the state’s small businesses are likewise scrambling to stay afloat as the economy continues to sputter.
Mark Hayward, Rhode Island district director of the U.S. Small Business Administration, said his office has received between 200 and 300 inquiries each day from small-business owners, who have either been forced to scale back operations or close their doors entirely because of shutdowns related to the global pandemic.
And while he couldn’t immediately provide data on how many Rhode Island businesses have applied so far for the SBA’s Economic Injury Disaster Loan Program — recently authorized in Rhode Island — Hayward said the application system has been under heavy strain across the country.
“No system has ever seen this kind of push,” Hayward said Wednesday.
Yet because of the high demand for the disaster-loan program, which allows owners to access low-interest loans to help pay operational expenses and fixed-costs, Hayward recommended owners apply sooner rather than later.
Rhode Island has about 99,000 small businesses; nationwide the category totals about 30 million. (The SBA defines a small business as 500 employees or less, which accounts for about 99% of all businesses in Rhode Island.) Many employers have been asked to close down to help stop the spread of the disease, which has killed thousands across the globe.
Gov. Gina Raimondo has ordered a shutdown of all dine-in services at restaurants and bars, along with all entertainment and recreational businesses, barbershops, beauty salons and gyms.
Some disaster-loan applicants so far have been rejected because of credit-score restrictions, but Hayward said those rejections were inadvertent and he’s urging them to reapply. His office is also reaching out to those rejected applicants individually to get them back into the queue.
“You need to get into the queue,” Hayward said.
Beyond the disaster-loan program, the SBA has also called for a three- to six-month suspension on all payments – interest and principal – from businesses with SBA-backed loans made before the public health crisis.
The SBA – a federal agency with state offices across the country – partners with banks and credit unions to make low-interest loans to businesses to help pay for operations (known as the 7a loan program) and big-ticket items like equipment (the 504 loan program).
“We are doing everything that we can to encourage lenders to respond to their small-business communities before they even get a call from them,” Hayward said.
For the most part, Hayward said, lenders have been supportive of the request, including Navigant Credit Union – which made the most SBA loans last year in Rhode Island.
Navigant President and CEO Gary Furtado said the credit union strongly supported the SBA’s decision to allow for the payment deferrals, and encouraged loan holders to reach out directly to their lenders if they plan to take advantage of the option.
“The business owners who rely on Navigant Credit Union and on organizations like the SBA are working through unprecedented times,” Furtado said. “As lenders, it’s our role to do anything we can to help expedite the recovery process and work with the small business community to navigate this crisis together.”
The SBA and small-business community, meanwhile, are closely watching the $2 trillion federal stimulus package nearing its way to approval on Capitol Hill, which is forecast to mean billions of dollars in additional funding for Rhode Island.
The agreement reached overnight includes $10 billion for the SBA to make emergency grants of up to $10,000 to cover small business operating costs, along with loan forgiveness if they retain certain workers, according to U.S. Sen. Jack Reed’s office.
Hayward said business owners already have been reaching out about the new money – even though it hadn’t even been voted on yet. For now, he said, he’s encouraging small-business owners to reach out to the SBA, Certified Development Centers and the business counseling nonprofit SCORE with questions and concerns.
The R.I. Commerce Corp. has likewise offered its assistance to any small businesses seeking help, and created a Frequently Asked Questions related to the SBA disaster loan program.
Rhode Island small-business owners looking to make inquiries to the SBA are encouraged to email the district office at RhodeIsland_DO@sba.gov.
“The processing is slow,” Hayward said. “But we have plenty of money.”
Ted Nesi contributed to this story.