Small businesses nationwide are in a race against time for survival.

The U.S. Small Business Administration reported Saturday morning that banks had approved more than 725,000 loans from its $349 billion Paycheck Protection Program, totaling over $182 billion. That's progress, for sure, coming a week after business owners could first begin applying, a launch marked by chaos and confusion. The loan disbursement timeline is still unknown, prolonging economic uncertainty as small businesses scramble to get through the shutdown.

"It is frustrating," said Neil Bradley, U.S. Chamber of Commerce executive vice president and chief policy officer, speaking during Inc.'s National Small Business Town Hall on Friday. "But it is also a Herculean effort that's being undertaken here: to move an unprecedented amount of money through an unprecedented number of institutions to an unprecedented number of small businesses. I think it's going to get faster and faster as we go--but be patient, hang on, it is working."

Patience is doubtless in short supply. The Treasury Department initially required lenders to pay out the loans within five days of the SBA approving them. Early in the week, the government extended that to 10 days, and it's unclear just how many businesses have received cash. Covid Loan Tracker, a website two business owners in Florida launched to track loans made to small businesses, shows that as of Saturday morning, 2 percent of the 1,760 small businesses surveyed had received stimulus money.

Adding to the concern is the reality that the program's funding isn't enough. The government has already approved more than half the fund. Senate Democrats and Republicans each proposed increasing the program's funds by $250 billion on Thursday, but disagree on how to allocate the money.

 inline image

Dan Klein and Patrick Tannous are among the lucky. This past Monday, the co-founders of Tiesta Tea, a tea maker based in Chicago, received approval for a $230,000 paycheck protection loan serviced through PNC Bank. "It was a miracle," said Tannous, the company's president. 

Illinois is under a shelter-in-place order, but Tiesta Tea is considered an essential business--and the 20-employee company is scrambling to staff its warehouse after multiple workers became high-risk for coronavirus exposure. And its largest customer, a national grocery chain with 1,200 stores nationwide that accounts for 20 percent of Tiesta Tea's annual revenue, isn't currently accepting shipments. (Klein, Tiesta Tea's CEO and an Inc. 30 Under 30 honoree in 2018, declined to identify the grocery chain.)

Klein said his lender told him that Tiesta Tea's loan money could arrive next week--but he's skeptical. "I would be surprised if that timeline got hit," he said, adding that he needs the money by the end of April to avoid a "critical" payroll situation. "With all the delays that people are seeing, there's a lot of uncertainty."

 inline image

Nicole Snow, founder and CEO of Darn Good Yarn, a yarn, clothing, and home goods wholesaler, is in a similar situation. On March 3, Snow told Inc. that daily sales had fallen by 50 percent, revenue projections were cratering, and she was paring back operating hours for her 14 employees. As of Friday, her company's $200,000 paycheck protection loan application still hadn't been approved. Snow said her lender, Capital Bank, told her to expect both approval and fund disbursement next week.

She's searching for ways to bridge the gap until the money arrives. "The easy thing would be to get a bridge loan, but you can't use the PPP to pay back a loan--it has to be used for payroll costs, and there's no workaround for that," Snow said. "We are just keeping our head above water right now."

Of course, many small businesses face major hardships regardless of the lending program's timeline. Melinda Travis, founder and CEO of Los Angeles-based creative agency Mile 44, works primarily with athletes and sports brands. She estimated her industry's event cancelations could cost her 60 percent of Mile 44's projected 2020 revenue.

Travis applied for a paycheck protection loan on Monday, but most of her workers are 1099 contractors who couldn't legally be included in her payroll calculations. The loan, she said, would only cover 30 percent of her functional payroll. (Travis didn't offer an exact number but said she employs fewer than 20 people.)

Friday was the first day of eligibility for independent contractors to apply for their own paycheck protection loans. Instead of working, Travis spent much of the day helping her contractors put together their applications.

"For a lot of entrepreneurs, we don't want free money," Travis said. "We just want access to working capital. The government and the SBA are spending so much money, and giving everyone a drop, and that's not going to be enough to solve the problem. A lot of businesses are not going to be able to weather the storm."