Only one month into the pandemic, and one yr into fulfilling his long-standing dream of proudly owning a enterprise, Andrew Benavides’s Metropolis Heights espresso store’s gross sales dropped by half.
“People decided not to go out anymore,” he stated. “And it was frustrating, discouraging for sure.”
Benavides, 26, hoped to make use of a Paycheck Safety Program (PPP) loan as a lifeline to cowl every little thing that retains his enterprise known as Cafeina afloat — hire, utilities, stock. However then got here extra dangerous information. Officers advised him he wasn’t eligible for the federal aid loan.
“According to them at the time, I didn’t fall under one of their qualifications, which was having employees,” Benavides stated.
Tiny companies are bleeding in San Diego County because the pandemic rages on. The PPP loans are a giant a part of the federal authorities’s effort to minimize the financial fallout from COVID-19. The cash is meant for companies hit exhausting by the pandemic lockdown.
However that monetary assist may not be attending to its targets as a result of the federal government’s definition of small companies for the loans was these with fewer than 500 staff.
“To most people, that’s a very large business,” stated Enrique Gandarilla, government director of the Metropolis Heights Enterprise Affiliation. “And if they really wanted to help Main Street America, they should have lowered that threshold so that these smaller businesses wouldn’t have to compete with businesses that have 500 employees.”
Gandarilla stated mother and pop shops and solo outlets, comparable to Benavides’s Cafeina, even needed to compete within the utility course of itself.
“I think large businesses in more affluent areas that have healthy bank accounts and can work with lawyers and accountants and financial advisers had a much easier time,” Gandarilla stated. “Whereas a small business person is the CEO, the human resources department, the finance department, the IT department. They do everything so they can’t just delegate this stuff to other staff to process. They have to do it themselves.”
And there have been different obstacles.
“The rules kept changing,” Gandarilla stated. “It’s just not a good situation for small businesses.”
Particularly in some poorer communities of shade comparable to Metropolis Heights, which obtained a complete of 317 loans. That cash, in line with federal knowledge, helped save round 1,500 jobs.
In distinction, Clairemont, north of I-Eight and the place greater than half the inhabitants is white, obtained 800 loans and retained over 3,600 jobs. Clairemont’s inhabitants is definitely just below 1 / 4 smaller than Metropolis Heights. La Jolla companies took in 1,550 loans and saved 17,500 jobs.
Gandarilla blamed that extensive hole on poor loan outreach in areas which are low-income, of shade and ethnically combined.
“In City Heights, we have a community that is extremely diverse with many first-generation immigrants that are entrepreneurs, very entrepreneurial,” he stated. “But they come from countries where they don’t trust the government for very good reasons and they’re not used to dealing with government agencies.”
There are additionally huge margins within the variety of PPP loans given out to some cities, north and south of the Eight Freeway. Chula Vista obtained 2,200 PPP loans and saved over 21,000 jobs. Carlsbad companies obtained 3,400 loans, preserving greater than 38,000 jobs. Escondido seems to be an outlier. The ethnically numerous North County metropolis secured 2,100 loans and held on to 32,000 jobs. It’s one of many cities that was extra environment friendly in a key aim of this system — job preservation.
“Cities like Escondido, El Cajon, La Mesa, their small businesses saved over 6 1/2 jobs per loan, whereas in Encinitas, for example, it was only 4.4 jobs per loan,” stated San Diego State College enterprise lecturer Miro Copic.
Copic stated general, the distribution of loans was aligned with the distribution of companies within the county.
“A lot of business, a lot of new office buildings, a lot of manufacturing actually is in north San Diego County,” Copic stated. “They are in these Vista and San Marcos corridors. And a large part of the population is north of the 8.”
He stated finally, the PPP served its mission in getting small loans out to small companies.
“The number of loans less than $150 thousand were 85 percent of the PPP loans processed in San Diego County,” Copic stated.
However he additionally agreed officers have fallen quick in serving all companies who wanted the cash.
“From a federal, state and local perspective, there could be a lot more done in areas that are underserved, that have hundreds of people of color that need to have access to keep businesses open, without a doubt,” Copic stated. “The government has done an average to below-average job of communicating the relative simplicity of applying for the loans. Compared to applying for a loan at a bank, this is super simple.”
Extra coronavirus aid is probably going in retailer, although, as Congress works on one other stimulus bundle.
There are additionally grass-roots efforts to assist native companies hit exhausting by the pandemic, in line with Gandarilla.
“We decided that we needed to create our own fund for our businesses in City Heights because we didn’t see that many of them could successfully compete for these available funds, whether it’s at the city level, state level or the federal level,” Gandarilla stated. “And fortunately we were able to raise $230 thousand to support many of the businesses that didn’t receive any money.”
As for Benavides, he says he’ll apply for the following spherical of PPP loans.
“We don’t need too much, but we still need a lump sum just to keep our lights on,” he stated.
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