Small businesses struggling as federal loan programs dry up

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PROVIDENCE, R.I. (WPRI) — As businesses across Rhode Island continue to keep their doors shut, it appears some of the relief that their owners were looking for is starting to run dry.

Arrow Salon will be celebrating its third year come August, but owner Elyse Farnsworth said she’s been struggling to find funds to help keep her business afloat long enough to make it to that anniversary.

Farnsworth used her savings to open the salon on Hope Street in Providence.

“Because of that reason, because I don’t have a loan out with a bank, I was denied most help,” she said.

Farnsworth said she applied for the U.S. Small Business Administration’s new Paycheck Protection Program (PPP) but was denied because her employees are considered independent contractors.

“It’s a rental salon, so they rent their space, so their income is theirs,” she explained. “They’re not on a payroll with me.”

Related: $10M small biz loan program hits capacity just hours after launch

She said she then applied for a forgivable $10,000 loan through the Small Business Administration.

“Originally, the SBA promised $10,000 in a forgivable loan but then changed it to $1,000 per employee because they had too many applications come in,” she said.

“I contacted the SBA multiple times and Bank of America multiple times to run them through my information and make sure I would qualify and be eligible for all of these loans, and I was given the thumbs up at every turn, but when it came time to actually get the money, I was denied,” she said.

With several of the federal loan programs drying up, U.S. Sen. Jack Reed blamed the Trump administration for failing to plan for high demand.

“People who invested their entire lives building up small businesses are watching them slowly collapse while Trump administration officials struggle to issue clear guidance,” he said in a statement.

But Republicans say it’s House and Senate Democrats that are slowing up a new relief bill, by refusing to increase funding for the PPP unless it’s paired with more money for hospitals and state governments.

In the meantime, Farnsworth said people like her are stuck in the middle.

“People who are not involved in a small business think we are all doing fine, when really we’re drowning,” she said. “I’m lucky. I know my business will stay open. We’ll take a hit, but we’ll stay open. I know so many small businesses in Providence that won’t survive this simply because no one’s looking out for them.”

Read: Farnsworth’s open letter to Gov. Raimondo about small business response

Farnsworth said she hit another roadblock when she tried to file for unemployment benefits.

“We then applied for unemployment after they enacted the CARES Act, which let self-employed people apply, and about a week later I got a letter in the mail telling me that I was denied because I made $0 last year,” she said, adding that that’s not true.

Farnsworth said she is currently working with the R.I. Department of Labor and Training to receive benefits.

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