Mark S. Hayward was in Washington, D.C., on Sept. 11, 2001.
With the metro shut down following the devastating terrorist attacks in New York City and Washington, Hayward walked from the U.S. Small Business Administration headquarters to his hotel through empty streets and past shuttered storefronts.
While the impact of the COVID-19 pandemic is unlike anything Hayward has seen in his lifetime, including more than two decades as director of the SBA Rhode Island district office, that “eerie and unusual feeling” in the aftermath of Sept. 11 rings true today.
The long-term economic impact of the 2001 terrorist attacks, which hit Rhode Island’s hospitality industry particularly hard, also bears some resemblance to what many predict will be a monthslong economic slowdown caused by efforts to mitigate the spread of the new coronavirus.
‘We will get through this … businesses will recover.’
MARK S. HAYWARD, U.S. Small Business Administration Rhode Island District Office director
Still, Hayward was confident that just like following Sept. 11, things will turn around eventually.
“We will get through this, we will succeed, the market will recover, businesses will recover,” Hayward said. “It’s just a matter of getting through that process.”
And Hayward said the Rhode Island SBA office will be on the frontlines of helping small businesses through the recovery, with tools such as the SBA’s Economic Injury Disaster Loans program.
Gov. Gina M. Raimondo on March 16 filed an application to participate in the low-interest small-business loan program, making Rhode Island one of the first states to do so. The next day, all small businesses in Rhode Island were declared eligible for the SBA program.
The declaration allows the district office to open for loan applications from eligible small businesses – those with 500 or fewer employees and certain annual revenue requirements, which vary by industry. Nonprofits can also be eligible. Participants can receive loans for up to $2 million to cover fixed income and capital costs. Interest rates are 3.75% for for-profit companies and 2.75% for nonprofits – rates below what banks would typically offer even in a historic low-interest environment – with a four-month deferral on the first payment of principal and interest.
Businesses with existing SBA loans will also have the option to defer payments for three or six months depending on if the loans have been sold in a secondary market, Hayward said.
With Rhode Island restaurants and bars prohibited from offering dine-in services for at least two weeks and other businesses closing voluntarily, the SBA loan program might be crucial for businesses to stay afloat, said Laurie White, president of the Greater Providence Chamber of Commerce. Since the governor’s announcement on March 16, the Chamber has been working to make members aware of the Economic Injury Disaster Loans in addition to other state and federal resources, White said.
While White emphasized that it was up to businesses to make their own decisions, she encouraged members to investigate the SBA loans as an alternate source of funding as day-to-day cash flows, the lifeblood of service industry businesses such as restaurants and fitness studios, quickly evaporate.
Several members of the Northern Rhode Island Chamber of Commerce had already applied for the economic injury loans, even before the declaration was approved, according to Elizabeth Catucci, Chamber president.
Catucci acknowledged that certain businesses may be ineligible – those with existing lines of credit, for example – but she hoped the new source of temporary funding would make a difference for some small businesses.
“I think many will apply for it, and I hope they do because businesses are going to suffer,” Catucci said.
Bob Burke, co-owner of the Providence restaurant Pot au Feu, was not interested in taking out a loan and said other restaurant owners he had spoken with were similarly skeptical.
“I think these kind of programs look to hand you a shovel and say keep digging,” Burke said. “I don’t see debt as a life ring, I see it as an anchor ... that will sink us.”
Burke, who criticized Raimondo for not working with the restaurant industry before announcing the shutdown of dine-in services, sent a letter to the state on March 17 asking that officials waive the 8% in sales and meals taxes restaurants must pay for the month of February.
Financing, while important, is just one piece of what the SBA can offer to support the business community. Hayward encouraged businesses to take advantage of free technical assistance through the office’s Small Business Development Center program at the University of Rhode Island, programs for women- and veteran-owned businesses, and volunteer mentors available through the SCORE program.
“At this time of uncertainty, people need mentors, and people to help them,” Hayward said. “There is sufficient help out there to help everybody.”
Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.
