Across Cedar Rapids, small businesses are empty. Employees are all at home waiting for the coronavirus to pass, but as their incomes have stalled or declined, some of these small business owners are hoping the Paycheck Protection Program can help keep their employees paid.
The Payroll Protection Program is offering billions of dollars in loans to some small businesses, it’s part of a Congress-approved stimulus package in response to the coronavirus.
“Even nationally we were probably in the top percent of those who could apply, we were very early and after that the rules kept changing,” said small business owner Philip Greer. company.
Greer was one of the first to apply for a PPP loan from his bank. He took over Sparkling Clean in Cedar Rapids five years ago. He asked for $70,000 to cover the salaries of his employees and himself.
“And so they changed the rules as we went, we sent in additional documents and reconfigured the application, never losing our place in the queue, but updating as we went and we we did until yesterday. That’s when they said, ‘Okay, we’re going to exclude a lot of what you’re applying for’ and that’s when things got out of hand,” Greer said.
He said the bank would no longer process his loan. Greer said it was because he included his own salary, a so-called “owners’ draw,” in the loan, which the bank’s lawyers say can’t happen. So Greer decided to call the Small Business Association himself for clarification.
“I contacted them (SBA) and asked them about the owner’s draws, they stopped, put me on hold for a bit, consulted and came back and said, yeah, that should be included” , Greer said.
Greer is not alone in the confusion. Paul Heath, from the American Center for Small Business Development at the University of Iowa, said he had a different understanding of the current guidelines.
“Owners are pulling and K-1 revenue, which would be revenue when there is a partnership, cannot be counted as payroll at this time anyway,” Heath said.
Now Greer said he was at a crossroads. He can either wait for the change or take out a reduced loan, but he fears this will put his business at risk.
“Money is running out for small business owners and for their business while this thing is here in limbo,” Greer said.
Greer’s bank told TV9 in a statement that it was following instructions from representatives of the SBA and other bank agencies.