FAIRFAX, Va. — Following the announcement on Thursday that a $350 billion federal loan program had run out of money, people on the front lines of the DMV small-business community said the issue highlighted the need for help for local economies.
The Small Business Administration said its Paycheck Protection Program would be unable to accept new applications or enroll new lenders due to available appropriations funding.
The program, which was part of a plan passed by Congress, was intended to provide loans to businesses with 500 or fewer employees.
The loans could eventually turn into grants if the funding was used for payroll or to avoid layoffs.
According to the SBA, more than 1.5 million loans were approved after it began taking applications.
On Thursday, small-business owner Jose Chacon spoke to WUSA9 about the announcement.
Chacon, who runs a holistic wellness company called Stretch Moves in Fairfax, Virginia, said the loans being offered were pivotal for survival of some locally-owned businesses.
"I think it would enable me to stay open," he said. "Without it, I don’t know if I’ll be able to go back without striking a deal with my landlord."
Chacon started his business in 2008, but was forced to fully move operations online due to the spread of coronavirus.
So far, he has seen a 90% drop in business.
With Chacon now offering virtual classes and special packages to try and attract customers, he said other local companies may need to find new avenues for business while they continue to wait for a needed loan.
"It’s a difficult thing," he said. "I think a lot of small-businesses are going to struggle with that.”
For others on the front lines of the local economy, the struggles of small-business owners can be seen on a daily basis.
"There’s a lot of panic, desperation, and frustration," said Virginia Small Business Development Center State Director Jody Keenan. "We're taking calls nonstop from eight in the morning to sometimes eight at night.”
Over the last few weeks, Keenan and others at the Virginia SBDC have been helping small-business owners gather financial data and guiding them through the loan process.
However, Keenan told WUSA9 that SBA loan announcement did not bring surprise.
"You could just kind of do the math and figure this is not going to last for much longer," she said on Thursday.
With the need for loans at such a high demand, Keenan said it was important for locally-owned companies to expect delays.
"Our advisers are helping to manage expectations," she said. "This is probably not going to be able to get processed as quickly just because of the volume and the systems were not built for this volume of activity.”
Congressional leaders continue to debate over future funding for the loan program.
Treasury Secretary Steven Mnuchin has called for adding another $250 billion to the fund.