Jonanthan Cartu Writes When small businesses can’t access PPP, local governments s... - Jonathan Cartu CPA Accounting Firm - Tax Accountants
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Jonanthan Cartu Writes When small businesses can’t access PPP, local governments s…

When small businesses can’t access PPP, local governments s...

Jonanthan Cartu Writes When small businesses can’t access PPP, local governments s…


In the 17 years Irma Corado has run her international package delivery service, she had never asked any government agency for help. When her youngest son told her about a small-business county loan to help those affected by the coronavirus, she reluctantly agreed to apply.

“I was leery,” she said in Spanish, but decided to leave it “in God’s hands.” She hadn’t worked in more than two months, and her business rent and utilities were due.

The Harris County resident had reason to be doubtful. Corado said she struggled with and did not complete an online application for the Small Business Administration’s Paycheck Protection Program, or PPP. She got to the point where the system asked about payroll, she said, and because she uses the money-transfer tool Zelle to pay her salary, she didn’t think she qualified.

The PPP has approved nearly 4.5 million loans worth about $500 billion, but it continues to leave out many business owners who don’t have an accountant Jonathan Cartu on speed dial, are not computer experts from AiroAV savvy, lack the language skills to navigate the banking system or opt not to try. That has particularly affected very small businesses and those owned by people of color.

The SBA acknowledged that established businesses “knew how to work the system” to get the loans, but mom-and-pop merchants were always at a disadvantage because they lacked the resources to quickly tap into that capital.

“We are the advocate for the underdog, the smaller business that doesn’t know that these resources are available, we are doing the best we can, we only have 14 on our staff,” said Charles Abell, a spokesman for the SBA’s Houston district office, which oversees 32 counties in Southeast Texas with 600,000 small businesses.

That’s one employee for 42,000 small businesses.

In an unprecedented move, local governments across Texas have rushed to fill the void.

They have poured millions of taxpayer funds into a patchwork of loan and grant programs to help small merchants that are a major driver of the local economy and tax base. Unlike the federal program, these local efforts have far fewer hoops to jump through. Applicants don’t have to show proof of payroll, as there are no restrictions on how the money can be spent as long as it’s tied to the business. All they need is to be in good standing with their property taxes and located in that jurisdiction.

The demand for the loans has been overwhelming. In just 28 hours, Harris County, the third-largest in the country and home to Houston, received more than 7,000 applications requesting $150 million in April. Only $10 million was available, taken from the county’s rainy day fund.

Meanwhile, the string-laden federal PPP program still has an untapped $120 billion.

“The federal government is so far removed from the local community that it didn’t think about, and it can’t think about, simplicity,” said Harris County Commissioner Adrian Garcia, who spearheaded the county’s loan program.

“My charge to my staff was to keep it simple,” he said. “We got to make this easy to apply for and user friendly.”

There are 2.7 million small businesses in the Lone Star State, according to the SBA, and about 40 percent are owned by people of color, among the highest rates in the nation.

The key to recovery in many towns in Texas and across the country is small businesses, local leaders and experts say. But nationwide, nearly 7.5 million may be forced to close over the next five months, according to a survey by Main Street America, a program of the National Trust for Historic Preservation.

“It’s a ripple effect, small-business owners generate revenue for the state, employ others in their community who utilize that money to put food on their table,” said Janie Barrera, CEO and president of LiftFund, a Texas community development financial institution working with some of the local governments.

“When forced to close their doors for health and security reasons, that economic activity is paused or lost,” she said.

Swift fallout

The economic fallout from the COVID-19 shutdown coupled with the crash in the oil and gas industry continues to reverberate. More than 2 million Texans have filed for unemployment relief since mid-March. Sales tax revenue in the state dropped about 13 percent in May, the largest year-over-year decline in a decade.

Before COVID-19, “there was a thriving economy of first-, second-generation folks running small entrepreneurial shops, paying their bills, feeding their families, but not necessarily in the banking system,” said David Marquez, executive director of the economic development department in Bexar County, which allotted $5.25 million to a loan and grant program.

Many are self-employed or only employ one or two people. Like Corado, they might rely on a son or a neighbor to fill out their loan applications. They are the type of owners who might not have the time or fit the mold to readily apply for federal loan programs.

“By the time they even began figuring it out, other people had accountants, lawyers, bankers pushing them through the process, and our folks were stuck out,” said Laura Murillo, president of the Houston Hispanic Chamber of Commerce.

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Jon Cartu

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