Henry Yun, owner of Green Leaf Cleaners, an eco-friendly dry cleaner in Eagle, was relieved when his loan from the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act program came through this week.
“The survival of my business was completely dependent on getting this loan,” said Yun, whose business employs five people, including himself.
Across the state, small businesses are starting to receive the loans, which are a lifeline during the economic disruption caused by COVID-19.
Business down 80%
Yun’s business dropped precipitously when people began working from home, he said.
“If people aren’t going into work, they don’t wear dry-clean-only clothes,” Yun said “We’re down about 80%, sometimes 90%.”
Yun said he applied for both the disaster loan, administered by the Small Business Administration (SBA), and the Paycheck Protection Program loan, from the SBA but administered through banks and credit unions.
Yun said he had applied for both kinds of loans almost immediately due to concerns about the appropriated money running out.
“There’s $350 billion, and they’re not expecting that to last,” Yun said. “If you don’t get in quick and get your loan approved, you might be left out of the cold.”
Though he applied for the SBA loan three weeks ago, he hasn’t gotten any response.
“The process has been really rough,” he said.
For the PPP loan, Yun said he applied through Zions Bank, with which he had an existing relationship, and received funding this week. Altogether, the process took about a week and a half, he said.
The process was hampered because of confusion about requirements, as well as banks being overwhelmed with applications, but Yun said his banker communicated well.
“We got email updates a couple of times a day, even if it was ‘Nothing has changed,’” he said.
Even if Yun were to shut down his business or continue running as he is now on a skeleton crew, his business would still accumulate $5,000 to $8,000 a month in debt, he said.
Ironically, Yun had just paid off the SBA loan in November that had enabled him to start his business in the first place.
“Now my hard work has finally paid off,” he remembered thinking. “I was feeling really good. Three months later, coronavirus hits.”
While the PPP loan won’t cover all his expenses, it will help, Yun said.
“I hope to be at full staff by June, and that will make the PPP forgiveable,” he said. “I know I’m taking on debt, but it will be sustainable. There are no business plans for this level of uncertainty.”
Yun isn’t alone. COVID-19 and ancillary economic effects have hit a number of Idaho small businesses hard, said Steve Scranton, chief investment officer for Washington Trust Bank, in an email message.
Washington Trust has received almost 3,500 applications representing more than $1 billion. The SBA said it had awarded 8,846 businesses about $1.4 billion.
“From a broad perspective, the decision to shut down a swath of the U.S. and Idaho economy to gain control over the virus, employment and economic growth will take a large hit,” Scranton said. “Just looking at the major categories of leisure and hospitality, construction and retail trade, this means that Idaho has shut down at least 25% of its economy.”
Consequently, because Idaho is a predominately small business state, the programs targeted for small businesses — including PPP, as well as numerous tax provisions — are the critical parts of the CARES Act to aid Idaho businesses, Scranton said.
According to SmartAsset, Idaho ranks 11th nationwide for the number of small businesses and small business workers, with 96.56% of its business ranked as “small,” or fewer than 500 employees. That is from a total of 38,452 small businesses, with 325,294 workers, comprising 56.27% of all workers statewide, the organization said.