For Dawn Morton, keeping her small business’ eight employees on payroll isn’t the only challenge presented by the coronavirus economic lockdown—there’s the spoiled milk to contend with, too.
Morton is the owner of Aurora Coffee in Wellsville, Kansas, a small town of 2,000 just outside Kansas City. Like many small business owners around the country, she’s had to close up shop because of the COVID-19 outbreak—and with her business on the line, she has turned to the federal government for any kind of lifeline to weather the storm.
In the CARES Act passed last month, Congress appropriated $350 million to establish the Paycheck Protection Program, an initiative to inject businesses with cash so they keep their employees on payroll. The desperately-needed funds ran out last Thursday—after the program was running for less than two weeks—and Congress and the Trump administration are currently working out a deal to replenish its funds.
For Morton and her eight employees, the PPP was welcome relief. But it’s not going to save her cafe, she explained to The Daily Beast, because it’s the other bills coming due that could prove most crushing—things like rent, mortgage, utilities.
And if the shop is eventually able to reopen, says Morton, “we need money to basically restart our kitchens, our coffee bars. All of the food has to be replaced, all the dairy and alternative milks, and a shitload of coffee beans, in my case. It’s all rotten now, along with our heavy cream, half and half, lactose free milk.”
That’s where another program comes in—or is supposed to, at least. The Economic Injury Disaster Loan program, or EIDL, has long existed to help businesses cope with the aftermath of natural disasters like hurricanes or tornadoes. With every U.S. state and territory in a declared state of emergency, EIDL has been available for business owners to apply for low-interest loans to cover things like rent and lost inventory because of the coronavirus outbreak.
But the CARES Act appropriated $10 billion for the EIDL program—less than three percent of what was appropriated to start the PPP. It’s also out of money, too, after facing an avalanche of applications: lawmakers have been told that there have been over five million applicants for the EIDL program. By contrast, just over 1.6 million applicants have been approved for PPP funds, though it’s unclear how many more applicants have tried and failed to get them.
Despite the widespread demand, however, the EIDL program has attracted hardly any attention from Washington. In his regular remarks from the White House podium, Trump hasn’t mentioned the program, and congressional leaders haven’t much, either. As of Sunday night, it was even unclear if more funds for the program would be included in the next round of coronavirus relief funding, which is expected to be approved sometime this week.
That’s leaving business owners like Morton—who applied for EIDL loans but said she’s seen “fuck all” from the Small Business Administration on it—frustrated. “What business owners need is more than paychecks for their employees,” she said. “Washington needs to make small businesses a priority instead of an afterthought.”
That a program of such significance for thousands of business owners has become, at best, a footnote in Washington’s response to the coronavirus speaks to the unprecedented magnitude of the crisis. Congress and the White House have had to develop responses to the virus that touch seemingly every aspect of the U.S. government, health care system, and economy, tossing some $4 trillion and counting at the crisis so far.
Even so, small business owners, lawmakers, and policy experts are scratching their heads as to how such a potentially valuable lifeline seemed to be cut adrift. “EIDL has been left behind,” said Jared Bernstein, a fellow at the Center for Budget and Policy Priorities think tank and a former top economic adviser in the Barack Obama White House. “The problem with the PPP is it’s overly focused on payrolls, whereas a lot of businesses are facing shutdown due to fixed costs such as rent, outstanding loans, and restocking inventory on the other side of the crisis.”
“There’s nothing at all wrong with promoting payrolls,” continued Bernstein, “but if you don’t have a business, there’s nowhere for the payroll to come to the worker.”
The PPP was conceived of as the “battleship” initiative for Washington to counter the COVID-19 induced economic crisis, as Bernstein put it; indeed, it’s been the focus of fighting between Democrats and Republicans in the last week. Before the PPP funding ran out, Senate Majority Leader Mitch McConnell (R-KY) pushed for Congress to approve more money to reopen the program; Democrats declined to go along in hopes of striking a deal to include more funding for struggling hospitals and state governments alongside it.
As the White House and Congress work out a deal, a contingent of lawmakers has attempted to raise the alarm about EIDL. On Thursday, more than 100 House members sent a letter to Jovita Carranza, the chief of the Small Business Administration, expressing their concern over “severe oversubscription” of EIDL loans. “We recognize the EIDL system was never designed to process a disaster of this magnitude,” wrote the lawmakers, “however, we are concerned that many small businesses cannot wait much longer to receive EIDL funds from the federal government.”
And many are waiting. Several small business owners who spoke to The Daily Beast described poor or non-existent communication from the government after submitting their applications for EIDL relief. Morton, for example, said she applied a second time for EIDL funds because she had no status update on her first application.
What’s been especially frustrating for those struggling is that money from the EIDL program is specifically meant to be issued quickly. “EIDL has been a massive disappointment,” said Greg Hunnicut, who owns a small remodeling business in Houston. He applied for an EIDL a week and a half ago and hasn’t heard anything back. “I knew PPP would be a cluster, that seemed obvious to me. The EIDL, I thought, was going to be a quick bit of help.”
Overwhelming demand for the program also forced the SBA to limit loan amounts. Now, it’s metered by number of employees, with businesses able to get as much as $10,000 with $1,000 per employee.
For self-proprietors like Alyssa Marsh, who runs an event photo booth business with her husband in Pennsylvania, that’s cold comfort. “What’s $1,000 going to do?” she asked. “That’s nothing. It’s help, everyone appreciates the help… but to have $10,000, that goes a long way for someone like me.”
Marsh lives in State College, home of Penn State University, and she says the long-term closure of the campus has scuttled basically all of her business through at least the fall. She says she’s not eligible for unemployment, and with her EIDL relief limited, her family’s outlook is bleak.
“It feels hopeless,” Marsh said in an interview. Compounding that despair, she said, is seeing the reports that major companies and chains have accessed relief funds pitched as Main Street relief. “There’s real people on the other side of these laws, and they’re just playing political games,” she said of Washington. “It’s disgusting.”
The next day, Marsh messaged The Daily Beast, with a small sign of hope: the government had checked her credit score, the very first step of vetting for her loan.