Small businesses worry final aid package will neglect them again
Owners have seen little financial aid from Washington over the past two years despite multiple COVID-19 relief packages totaling over $5 trillion
Steven Gentile had to shut down his amusement park for the entire 2020 season, burning through his emergency fund halfway through the year and taking on over $1 million in debt.
Darden Kirby may have to sell his assisted living facility if business doesn’t improve soon. Dwayne Thomas is postponing his planned retirement by five years to pay off a sixfold increase in debt his events lighting company took on during the pandemic.
These and other small-business owners around the country, including some of those most affected by pandemic-era lockdowns, have seen little financial aid from Washington over the past two years. That’s despite policymakers enacting multiple COVID-19 relief packages totaling over $5 trillion.
As lawmakers attempt another, final round of small-business aid, many owners and industry representatives worry they’ll be left out.
Competing House and Senate bills are largely focused on backfilling a depleted grants fund for restaurants, bars and other food and beverage service companies that didn’t get money in an initial $28.6 billion round last year. But other sectors hit hard by local restrictions and customers staying home would see some relief as well.
The biggest challenge, aside from convincing enough Republicans to back more largely un-offset spending, is deciding how to allocate the limited dollars lawmakers are willing to provide outside of the restaurant fund.
‘Incredible food fight’
The Senate bill would devote $8 billion to a select few industries, like gyms, buses and ferries, border area businesses, and staging, lighting, sound and other live event service providers.
The House-passed bill would create a $13 billion industry-neutral grant program for other businesses.
Several small-business owners who spoke with CQ Roll Call would qualify for aid under the House bill but not the Senate version.
“We cannot bear to see Congress pick winners and losers again,” said Thomas, who serves as government affairs director for the Live Events Coalition. The group started two years ago to advocate for the numerous micro-industries that help run corporate, social and entertainment events.
Thomas’ industry trade group and most others interviewed for this story are part of the Economic Bridge Coalition, which helped craft the broader approach taken in the House bill. They worry Congress will either pass nothing or go with the Senate version, leaving their businesses shut out.
But others outside of that coalition have concerns about the House’s industry-neutral approach too.
Under that bill, the Small Business Administration is directed to steer aid first to those applicants who suffered the worst revenue losses, and among those, the SBA can prioritize aid to the smallest firms. Ostensibly, the agency can reduce each grant proportionally to ensure all applicants get at least a sliver of what they asked for, but the money is expected to run out quickly.
“It would be an incredible food fight,” said Maggie Elehwany, senior vice president for public affairs of Argentum, a group that represents 31,000 assisted living facilities that are home to 2 million seniors across the country. “We need some type of prioritization to protect these folks.”
‘Skin of my teeth’
Kirby, who owns a 16-bed assisted living facility in Abbeville, Ala., called Twin Magnolias, said he “never wanted to get anything from the government.”
But then the pandemic hit and his revenues were down 50 percent while his expenses decreased by only 10 percent. He went a year without adding a new resident, at one point shutting down an entire wing of his facility because of empty beds.
As staffing and other fixed costs persisted, Kirby burned through cash and dipped into his personal savings to keep Twin Magnolias running.
“I’ve done this for 26 years, and I have never experienced anything like it,” Kirby said. “I’ve been holding on by the skin of my teeth just hoping that things are going to be turned around.”
Business has begun to pick up, but Kirby said he’ll have to evaluate within a few months whether he can keep the business running or would be better off selling. “I am so emotionally exhausted, physically exhausted. And my children are concerned about me,” he said.
Kirby got some help from the Paycheck Protection Program, enacted in early 2020 to back forgivable loans so small businesses could keep employees on payroll. But the vast majority of assisted living facilities did not qualify for PPP loans, Elehwany said.
Assisted living facilities also had trouble tapping into $178 billion Congress appropriated for health care providers because they are predominantly “private pay” options that don’t receive Medicare payments like skilled nursing facilities.
By the time the provider relief program’s requirements were rewritten to be more flexible, funds had largely dried up. Elehwany estimates assisted living facilities got around $1 billion, compared with roughly $30 billion in industry losses.
Limits for live events
Congress sought to help the live events industry when it created the $16 billion Shuttered Venue Operators Grant program in December 2020. But eligibility was limited to live venue operators and promoters, theatrical producers, talent representatives, live performing arts organization operators, museums and motion picture theaters.
The Senate small-business bill would provide $2 billion for companies that support events at those types of venues by providing services such as stages, lighting, sound or casts. But to qualify, businesses must receive at least 70 percent of their revenue from SVOG program-eligible operators — a tough hurdle for many event support companies.
“So many of the businesses that provide services to gatherings and events will work in multiple vertical markets,” Thomas said. His company — Greenlight Creative, based in Portland, Ore. — works a variety of events like corporate fundraisers, festivals, weddings, birthday parties, memorial services and more with four full-time and six part-time employees.
Greenlight lost 91 percent of its pre-pandemic revenue in 2020 and 65 percent in 2021. Thomas traded in a $100,000 life insurance policy he’d been making payments on for 30 years for $19,000, cut cable and other personal expenses and took advantage of forbearance on his mortgage and other personal debt so he could keep the business running.
He got some PPP funds but still had to take out other loans, increasing his debt load from around $100,000 before the pandemic to now more than $600,000.
“We pieced together every dime we could lay our hands on so that we could keep people working as much as there was work to do,” Thomas said.
While a federal grant wouldn’t cover all of his debt, Thomas said he “could finally breathe and start thinking about retirement again.”
Another small business that may not meet the Senate bill’s criteria is Cleveland-based Event Source, which rents party supplies like tables, chairs and linens for corporate and social events like the Rock & Roll Hall of Fame induction ceremony.
Event Source lost 95 percent of its business in 2020 and had to sell its 150,000-square-foot facility where it stores and processes its rental equipment to an investor for $4 million less than what it was worth to cover a bank note that came due.
While the company still rents space in the building, the equity that owner John Bibbo had built up over 20 years “nearly evaporated.”
After losing $7 million in the first two years of the pandemic, Event Source is seeing its revenues return to normal. But Bibbo expects it will take three to five years to dig out of that hole.
No aid for attractions
The attractions industry has also been left out of aid packages so far. Gentile’s Long Island amusement park, Adventureland, not only was closed for all of 2020 but had to open late last year because of New York’s pandemic restrictions.
Adventureland typically employs 600 to 700 part-time workers each season; it never got to hire in 2020. With a PPP loan, Gentile was able to keep 80 percent of his 25 full-time staff on payroll at a 25 percent reduced rate, while the others were able to go on unemployment.
“It was the hardest day in my Adventureland career to tell these guys … we have to take a pay cut,” Gentile said, noting he and his co-owner brother reduced their own pay while pouring personal savings into the business.
Adventureland is back to full staffing, but Gentile took on more than $1 million in debt during the pandemic to keep the business afloat that he said a federal grant would help him start to pay off.
“With or without the help from the Senate, we will get through this. It will take a much longer time,” Gentile said. “I don’t know if there are some other businesses that will get through it.”
Travel agencies ‘hammered’
Congress also directed billions of dollars in aid to airlines in the early stages of the pandemic when the travel industry took a big hit. While travel agencies qualified for a $25 billion airline loan program, most of that funding went to the airlines, according to Eben Peck, American Society of Travel Advisors executive vice president for advocacy.
Travel agencies earn most of their revenue from international and business travel, as well as cruises, all of which “were absolutely hammered by COVID,” Peck said. The industry experienced average revenue losses of 82 percent in 2020 and 71 percent in 2021.
Making matters worse, Peck said, is that most agencies still work on a commission basis and don’t get paid by cruise lines, airlines and other suppliers until the travel they book successfully concludes.
Before the pandemic, Jennifer Wilson-Buttigieg’s company, Valerie Wilson Travel, booked primarily international and high-end leisure travel, with sales topping $300 million.
The company, started by Wilson-Buttigieg’s mother in 1981 and headquartered in New York, survived plenty of travel-disrupting events: both Gulf Wars, SARS, Zika and 9/11.
But COVID-19 was different; 95 percent of sales “vanished overnight,” Wilson-Buttigieg said.
Wilson-Buttigieg, who co-chairs ASTA’s Government and Political Affairs Committee and is unrelated to Transportation Secretary Pete Buttigieg, made the “impossibly hard” choice to sell the family business to Houston-based FROSCH International Travel last year so her employees could keep their jobs and benefits.
“I'm advocating for anyone who’s actually still survived,” she said.