Beginning tomorrow, the city of Little Rock will be the newest government entity to offer financial aid to small businesses.
People should get in line early if they need the zero-interest loan the city is offering. The money will go fast.
The city has set aside $500,000 to provide forgivable loans to companies with less than 20 employees. Loans will cap out at $5,000 and will be forgiven after one year if jobs are created, retained or restored. More information is at littlerock.gov.
To be eligible for the loan, companies must be formally listed in the database of existing Little Rock businesses and must demonstrate income loss traced to the coronavirus pandemic.
[CORONAVIRUS: Click here for our complete coverage » arkansasonline.com/coronavirus]
Any aid being offered to help Arkansans make it through the coronavirus shutdown is gobbled up quickly and is gone as fast as it hits the market.
Mid-day Wednesday, for example, the governor and his assembled team of experts announced plans to reopen the Arkansas economy and an initiative to boost the effort with economic aid.
The $15 million Ready for Business program began taking applications at 5 p.m. Wednesday for grants ranging from $1,000 to $100,000, depending on the number of Arkansans employed by the business. An hour later the program was shut down because the money was gone.
At 6:30 p.m., the Arkansas Economic Development Commission posted a tweet saying the program was closed. "The Ready for Business Grant Program received over 2,000 applications in one hour, exceeding the allocated funding," the tweet said.
Arkansas also added another $1 million to a program providing $25,000 bridge loans to small businesses awaiting more substantial support from the federal government. That money, too, was already accounted for even as it was being announced.
About 100 businesses that applied but didn't receive funding when the initiative was originally announced in March were eligible for the replenishment. There essentially was no funding available for any new applicants.
Community organizations with outreach programs are finding similar responses.
Central Arkansas residents began lining up for free food packages to help feed their families as early as 4:30 a.m. for a giveaway that was scheduled to begin at 10 a.m.
Arkansas Foodbank volunteers started handing out boxes of meals early to move the cars stretched along Interstate 430 for the event at the Outlets of Little Rock. Enough food to feed 840 families was gone in 90 minutes.
Likewise, a Little Rock church distributed 120 boxes of food in an hour.
Those responses show the real need out there to keep families from going hungry and for businesses that need capital injections now to stay afloat.
Key economic indicators, at the same time, are revealing the depths of the economic deterioration.
U.S. consumer spending plummeted 7.5% in March, the deepest monthly decline in 60 years. Incomes dropped 2% in March -- the largest decline in 40 years -- and reflected business shutdowns that are laying off workers.
Gross domestic product also is falling fast -- it dropped by 4.8% for the quarter ending March 31. That measure shrank for the first time in six years and the quarterly decline was the largest since the 2008-09 recession.
The U.S. Bureau of Economic Analysis attributed the decline to stay-at-home orders. The orders "led to rapid changes in demand, as businesses and schools switched to remote work or cancelled operations, and consumers cancelled, restricted, or redirected their spending," the agency said in reporting the figures.
IRS PAYMENTS
A quick update on the $1,200 emergency stimulus payment for those making less than $75,000 a year: the White House reported last week that the Internal Revenue Service has issued more than 778,000 Economic Impact Payments totaling more than $1.4 billion to eligible Arkansans.
Don't fret if you haven't received a payment: go to Get My Payment at irs.gov to see where you stand. It may be as simple as making sure the IRS has your current banking information to make a direct deposit.
STILL WAITING
Gig-economy workers in Arkansas are still waiting for the state to open the pipeline so they can apply for the $600 weekly unemployment checks promised by the federal Coronavirus Aid, Relief and Economic Security Act.
The Arkansas Division of Workforce Services has been building a system to accommodate that working group.
Arkansas law does not permit paying unemployment insurance benefits to that category of workers. So, when Congress approved including the group in the weekly federal emergency aid, the state had to figure out how to accept, process and pay those unemployed workers.
A Workforce Services spokesman said the program should begin accepting applications this week. More than 20,000 workers have signed up for weekly updates on the state's progress so they're ready to pounce once applications are accepted.
Commerce Secretary Mike Preston has estimated that at least 125,000 self-employed and contract workers will file for benefits under the Pandemic Unemployment Assistance program. The initiatives provides $600 weekly for 39 weeks and payments will be retroactive going back to the week ending Feb. 8 for workers who can show they lost gigs or employment because of the coronavirus.
As for the $600 extended federal benefit, the Federal Reserve found that it will stretch a little farther in Arkansas. The Fed study accounted for regional price differences for goods and services and other essential household expenses.
The extended benefit is valued at $668 in Arkansas. The $600 payment is worth the most in Mississippi at $700 and the least in Hawaii, $506.
SBA LOAN UPDATE
The federal small business loan process didn't get any easier or simpler when round two of funding rolled out last week.
Hopes were high for small businesses in Arkansas as the U.S. Small Business Administration began accepting loan applications Monday morning. An hour later those aspirations were crashing along with the Small Business Administration's online application portal.
Lenders are required to use the online portal to submit loans on behalf of their small-business customers who need financial aid to stay afloat during the pandemic. Access to the portal was hit-or-miss for the first couple of days, and lenders were taking a fingers-crossed approach in submitting loans.
Small Business Administration officials tried a few tricks to influence the process and unclog the portal.
First, they outlawed the use of robotic submissions. Then officials restricted applications for emergency small-business loans to only those submitted by the country's smallest lenders, an unprecedented move that the agency pitched as granting "special access" to tiny banks and their customers.
For eight hours Wednesday evening, the Small Business Administration accepted Paycheck Protection Program (PPP) loans only from lenders with less than $1 billion in assets.
At week's end, Arkansas bankers said the application process was going smoothly.
Late numbers are coming in but the Small Business Administration reported that it processed more than 960,000 loans valued at nearly $100 billion. More than 5,300 lenders nationwide were involved in the effort.
The additional $310 billion that Congress provided to replenish the program is expected to be depleted this week. The first round of funding, $349 billion, ran dry in 13 days. "We urge any small business that needs PPP funds to work with their bank and apply quickly before funds are exhausted," said Lorrie Trogden, president and chief executive of the Arkansas Bankers Association.
SundayMonday Business on 05/03/2020