SBA Arkansas director says staff ramping for rush of queries for financial assistance from stimulus package
April 6-12, 2020
By Daily Record Staff
Federal CARES Act offers loans, other funding to mitigate COVID-19 related overhead costs
As Arkansas prepares for billions of dollars from the $2.2 trillion COVID-19 stimulus relief package to flow into the state in the coming weeks, the Arkansas branch of the Small Business Administration (SBA) is already seeing an influx of applications from Central Arkansas business impacted by the spreading virus.
Here in Arkansas, SBA District Director Edward Haddock, who oversees the agency’s district office for the state, said his staff is already seeing in influx of applications and queries locally concerning the $2.2 trillion relief package that also includes a $1,200 one-time payment to most taxpayers and extended unemployment benefits to workers laid off due to the coronavirus spread.
“We already have applications and approvals that are making their way through the system now and have been throughout the last week,” Haddock told the Daily Record. “That is going to continue to relieve small businesses in Arkansas. We not only have the Economic Injury Disaster Loan (EIDL) application open and processing, and we’ve got $18 billion of SBA lending authority that banks have to (access) to use every day to help and assist small businesses.”
Haddock said the EIDL program was already in place before the passage of the CARES Act but is being expanded to handle those small business impacted by the coronavirus pandemic. Under the 880-page legislation, Congress has allotted $10 Billion for through the SBA’s emergency disaster loan program, which over low-interest loans on a first-come-first-serve basis with deferment of payments up to a year.
The SBA is also overseeing the nearly $350 billion that will flow through the agency’s new Paycheck Protection Program, a loan forgiveness initiative that offers COVID-19 emergency cash to small firms to cover overhead costs like payroll, utilities and rent up to $10 billion. The program is aimed at companies with less than 500 employees, but is also open to nonprofits and self-employed persons, independent contractors and individuals that have organized as a sole proprietor with annual net earnings of less than $100,000 annually.
Haddock said after the late March approval of the CARES Act, SBA district offices across the country now have a 15-day window to implement changes due to coronavirus spread. Led by SBA Administrator Jovita Carranza, Haddock said the federal agency has been holding virtual meetings each day to make sure that the billions in relief funds and loans don’t get bottlenecked up in bureaucratic red tape.
“I was just recently off an SBA (conference) call, and we’re working and hopefully will beat that timeline significantly,” Haddock said of the two-week agency timeline to promulgate new COVID-19 lending rules.
Altogether, Congress has appropriated an additional provided SBA with an additional $675 million in resources it needs to staff up and administer these new and enhanced programs. Of that total, Haddock said he did not know how much the Arkansas district would receive after the lion’s share is expended to state’s like New York, California and Illinois with COVID-19 disaster declarations.
However, those small business owners in Arkansas with immediate need for capital from the coronavirus spread have two options, go first to an SBA-approved lender they already have existing relations or by contacting local SBA officials or filing an EIDL or PPP application on the agency’s website.
Local SBA officE Sees influx of COVID-related loan applications
As the local district office scale up to handle the influx of COVID-19 relation applications, Haddock said the CARES Act also authorizes greater participation in SBA loan programs by traditional FDIC-operated banks and other nonbank lenders. He said the omnibus stimulus package also gives SBA the flexibility to work with lenders and small business employers to keep them in business throughout the COVID-19 pandemic by removing some requirements for personal guarantees and collateral on some of the loans.
“This legislation gives (banks)more tools in their toolbox to use to get capital out to businesses with some of the great provisions to help relieve those small businesses in these uncertain and troubling time,” said the Arkansas SBA chief.
Ultimately, Haddock said the goal of the SBA is to keep Arkansas small business remain open and keeping employees on their job through the crisis. So that funds get speedily get to small business owners in Arkansas across the U.S. and keep the U.S. economy afloat, the federal legislation also provides that most of stimulus funds are expended during fiscal year 2020 that ends on Sept. 30, or by the end of the calendar year on Dec. 31.
To those small businesses across the state impacted by the COVID-19 emergency, Haddock offers this advice. First, employers should abide by the Centers for Disease and Control (CDC) guidelines on “social distancing” and gatherings of more than ten to keep employees and customers safe. “Maintaining their health ensures the long-term viability of their business, so ‘number one’ keep those employees safe and healthy,” he said.
Secondly, Haddock said COVID-19-impacted businesses should stay in contact with their lenders during the crisis as more information on financial options become available from the SBA, other federal agencies and the private sector. He said some Arkansas banks are already deferring interest-only loan payments up to between six months and a year and offering other ways to mitigate the financial impact of the virus spread.
Thirdly, Haddock said local businesses should understand exactly how the COVID-19 pandemic is impacting their operations financially. For example, he said, all small business should be putting together a financial statement to show much cash reserves are available, along with monthly overhead costs such as employee payroll, rent and utilities.
“Finally touch base with your SBA resource partner in order to stay up to date and get assistance through this. They’ve got different webinars and classes that they are running on cash flow protection and how to get online and turn this really into an opportunity for your business,” he said.
Depending on how long the coronavirus crisis last, Haddock said most Arkansas businesses can weather a month or two of uncertainly before they run into financial problems. “Anything beyond that is going to be a significant challenge,” he said.
The Arkansas SBA district administrator also said now that the shock of the pandemic has peaked, businesses are more aware of available resources with the roll-out of the third phase of the federal COVID-19 emergency. He said the challenge for SBA will be to get the federal guidelines and resources promulgated by CARES Act out to the small businesses where needed and quickly as possible.
Once the coronavirus pandemic plateaus and begins to subside and small businesses return to some since of normally, Haddock said a better picture of the overall U.S. economy will emerge. He said if the pandemic lasts more than eight to 12 weeks, there is already talk among some federal policymakers and congressional leaders about a “phase four” stimulus option.
“I think that will be more healthcare focused, but our businesses are going to have more challenges the longer this thing goes on,” he said.
Gov. Hutchinson creates COVID-19 legislative task force to make recommendations on $1.25 billion from CARES Act
On Monday (March 30), in his daily media briefing, Gov. Asa Hutchinson issued an executive order to create the Arkansas Coronavirus Aid, Relief, and Economic Security Act Steering Committee, or Arkansas CARES Act Steering Committee. The steering committee is composed of fifteen members appointed by the Governor, six of whom are members of the General Assembly.
Hutchinson order the committee to identify the needs of the state and make recommendations for the best use of the $1.25 billion in federal CARES Act funding that Arkansas is expected to receive at least from a $150 billion relief fund aimed at allowing states to mitigate COVID-19 related costs in calendar year 2020.
“It is in the best interest of the state and its citizens to identify best practices and procedures for ensuring the state of Arkansas, its citizens and businesses, realize the maximum relief and benefits under the available under the CARES Act,” Hutchinson wrote in his two-page executive order.
But the $1.25 billion that will flow into Arkansas through various programs operated by state agencies is just a small slide of federal cash, grants and loans that taxpayers, small businesses and corporations will be able to access through a three-phase stimulus package intended to touch nearly every segment of the U.S. economy.
Earlier on Mach 6 and March 18, President Donald Trump signed into law the first two coronavirus relief bills to help small business stays afloat through the next several weeks or possibly months. Those bills, known respectively as the Coronavirus Preparedness and Response Supplemental Appropriations Act (HR 6074 and Families First Coronavirus Response Act (HR 6201), were intended as measures to help U.S. workers and small businesses.
The final and largest phase of the stimulus package is known as the Coronavirus Aid, Relief, and Economic Security Act or the CARES Act. Approved by Congress on March 27, this legislation is the largest-ever stimulus package in U.S. history aimed at boosting the nation’s economy out of a recession. The omnibus legislation easily surpasses the $1.8 trillion Tax Cut and Jobs Act in 2017 and the similarly styled Economic Stimulus Act of 2008 and later approved bailout fund that costs U.S. taxpayers about $900 billion.
Unlike the 2008 package that offered taxpayers a $300 one-time payment at a cost of about $150 billion and a$700 billion “Trouble Asset Relief” fund that bailed out the U.S. banking sector and auto industry, the CARES Act focuses a large portion of the stimulus dollars on the ailing small business sector. “Already, small business owners across the U.S. have laid off nearly 6.65 million workers and more than 27,000 in Arkansas to deal with the coronavirus spread, according to the U.S. Labor Department.”
Haddock also said the $1.25 billion from the CARES Act mentioned by Gov. Hutchinson that passes through state agencies such as the Arkansas Department of Human Services, the state Departments of Commerce, Health and Workforce Services, the SBA funds will be handled separately by the Arkansas district office.
CDC’s laboratory test kit for severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). CDC tests are provided to U.S. state and local public health laboratories, Department of Defense (DOD) testing facilities, and select international labs. (Photo courtesy of CDC)