Assistance from the federal CARES Act hasn’t been easy to get for many small businesses nationwide. However, some in Brown County have been successful.
Paycheck Protection Program loans, or PPP, were created through the CARES Act to allow businesses with up to 500 employees to make payroll during shutdowns caused by COVID-19.
PPP money has been awarded in two phases: one starting in April, which was depleted in less than two weeks, and the second underway now. The total amount available was $650 billion.
As of May 1, Indiana banks had helped complete 67,747 PPP loans, totaling more than $9.5 billion, according to a press release from the Indiana Bankers Association.
County-specific data wasn’t available.
Nationwide, the average loan size was $79,000.
Another source of money for businesses is the Economic Injury Disaster Loan, or EIDL. Through EIDL, small business owners can not only apply for a loan, but also receive up to $10,000 upfront, which they don’t have to pay back to lenders.
Businesses with fewer than 500 employees are eligible, as well as private nonprofits and veterans organizations.
EIDL and PPP assist businesses, but serve different functions.
The Small Business Administration itself is handling EIDL applications, whereas PPP requests have to go through banks.
There are also more restrictions with PPP that EIDL. PPP loans can qualify for forgiveness later on, but in order for that to happen, at least 75 percent of them have to be spent on payroll. There’s not a requirement like this for EIDL.
PPP loans, though, can be much larger than EIDL ones. The maximum PPP loan is $10 million, whereas the biggest EIDL loan is just $2 million.
The local businesses mentioned below are not a complete list of which ones received PPP or EIDL aid; they just volunteered to share their stories.
Madeline’s French Country
Madeline’s French Country Shop at 100 S. Van Buren St. received a $12,200 PPP loan on April 28 through PNC Bank, which will be used primarily for payroll.
Owner David LaFon applied on April 14. “My application was registered just before the first funding ran out, so I was not sure if we would receive any money or not,” he said.
PNC called him April 26 to tell him his loan was funded, and the money deposited in his account on April 28. He was not sure if his was funded from the first round of loans or after the second round was made available.
LaFon said there was some confusion in the application process because PNC did not have clear guidelines from the lenders on whether the loans will be forgivable. He knew the basic guidelines: 75 percent can cover payroll while 25 percent may be used for rent and utilities. But, “one of the issues was as long as you bring all of your employees back by the end of June,” he said, “everything is forgivable. What happens if we use up all the PPP and our employees aren’t back yet?”
LaFon has three employees at Madeline’s, including his wife, himself and a manager. He said the downside to receiving the loan is that they are given eight weeks to use it, but at the time he received it, his store was closed.
He did apply an EIDL grant on March 27 but did not hear anything back.
“So, a little guy in Nashville did get a PPP loan,” LaFon said. “I really did not think we would.”
Madeline’s reopened May 8, taking new safety measures such as a plexiglass shield at the cash register and a hand sanitizing station.
Brown County Log Cabins
Patty Frensemeier of Hills O’ Brown Vacation Rentals uses all the banks in Nashville for various reasons, but Fifth Third is her main source.
“I got an email from Fifth Third asking if they could help me fill out forms for my PPP, on or around April 10,” Frensemeier said, “and that email stated that they would submit all of the info for me so that it would be done right the first time, since so many people are not versed in filling those forms out.”
She got all necessary information from her company’s accountant, sent it to Fifth Third, and in a little more than two weeks, had the PPP money in her account.
“They were easy to deal with and wonderful that they did this for their clients,” Frensemeier said. “Gregory Stierer of Fifth Third called me on Saturday evening at 9 p.m. to get this done, so kudos to Fifth Third for caring about their customer.”
The Educated Otter
On March 14, The Educated Otter closed its doors in downtown Nashville because it was considered a non-essential businesses, and for safety reasons.
Owner Diana Hostetler and her husband are considered high risk for the virus. She said she had some mild symptoms that could have been COVID-19 or allergies, but there no testing was available for her at that time. So, beginning March 14, she quarantined herself for 14 days.
“Fortunately, for me, my symptoms seemed to be allergy related to my environment,” Hostetler said. After the 14th day, she still stayed home as much as possible.
“To keep myself and my family safe, being closed was and is the right thing to do,” she said.
The Educated Otter was doing great business before COVID-19 appeared on the scene. “So, to go from doing really well to doing nothing was very hard,” she said. The store was on target to be up 106 percent for the month of March before it closed.
Hostetler applied for the EIDL three days before those funds were available. Businesses can receive up to $10,000 in the meantime until they get a loan. When that was changed to $1,000 per employee, that amount was deposited into Hostetler’s bank account.
Hostetler applied for the EIDL because she does not have any employees, but she is still waiting on the status of the loan.
“I still have not heard anything about the EIDL loan I applied for,” she said. “I know they’re looking at it. In the next few days, I’ll hear something.”
Hostetler is still grateful for the $1,000 grant from the EIDL program. “At this point, anything is helpful,” she said.
The money will hopefully allow The Educated Otter to adjust in the post-pandemic world of business. Hostetler plans to offer personalized Zoom shopping, where customers can make appointments to browse the store virtually. She’s already offering shipping and curbside, contact-less drop-off through the store’s website, shopneighborhood.com/shop/r_bmht0nju/The%20Educated%20Otter.
If everything is going well, she’ll open the doors to customers by appointment, providing masks and hand sanitizer for patrons.
“The way the store operated before March 14 will have to change,” Hostetler said.
“We are all in this together, and I hope that all these changes will be embraced by the friends of the Otter and moving forward will not be too much of a challenge and our friends will come back and see us.”
Brown County Music Center
The Brown County Music Center received around $82,000 in PPP money to cover the salaries of five employees for eight weeks. The total amount received was based on the venue’s prior payroll, which has been cut back, and totals around $20,000 a month currently.
“We’ll use some of it; we probably won’t be able to use all of it,” said management group board member Mike Lafferty.
The remaining money can be used to pay the interest on the venue’s mortgage, which is about $35,000 a month now, or on utilities. Utilities bills at the venue now range between $3,000 and $4,000 a month, said Brown County Convention and Visitors Commission President Kevin Ault.
Ault serves as co-president of the venue’s management group along with Barry Herring.
At the CVC meeting April 30, resident Sherrie Mitchell asked the board why they could not use the PPP money to pay the mortgage instead of payroll.
The county’s innkeepers tax was pledged as a backup revenue source for the venue’s mortgage payment if the music center did not bring in enough money to cover them monthly, and innkeepers tax revenue has been declining as fewer people are staying overnight here.
“The PPP can only be used for payroll and it can be used for interest on the mortgage, but we only received $82,000, so there’s not enough to pay interest out of that, nor can anything over and above payroll total more than 25 percent of the loan,” Ault explained.
“Because they have given it to us, we have to pay payroll out of it first.”
Mitchell suggested eliminating payroll and then using all of the money on interest payments for the venue.
“If you eliminate your payroll, you eliminate the whole thing,” Ault said.
“Say you had $100,000 worth of expenses. You can only spend 25 percent if you spent 75 percent on payroll to be forgiven,” Herring said.
“You spend it on other things, and it becomes a loan at 1 percent with a call rate in two years. If you don’t spend it in those ratios, it’s not forgiven. It becomes basically a loan, and that loan is due two years from the date that your PPP loan was funded.”
The music center is paying interest-only payments on its mortgage for the next three months.
Recently, the music center received a $150,000 loan from the county’s motor vehicle highway fund that will be paid back at the end of this year to help cover the mortgage. Mitchell questioned the CVC about using this money for the mortgage.
“The taxpayer is sacrificing. It was a priority to get this venue built, and it should be a priority to pay for it,” she said.
Ault said the venue will only take what it needs from the $150,000. “If we don’t need $150,000 we’re not taking $150,000,” he said.
Mitchell said that the venue should have had its mortgage payments set aside and saved from innkeepers tax if needed.
“This is also an unprecedented, unexpected pandemic that nobody was expecting,” Ault said.
