Having struggled in recent months after three decades in business, Mo Hair salon owner Joan Louis is looking to apply for another round of federal loan funds to keep the business running through the coronavirus pandemic.
Lewis Ashbey, chief executive officer of Dynamic Production Services in Lafayette, is too, with the latest federal loan process getting rolling this week.
"I'm just trying to hold on as long as I can. If it wasn't for the PPP, we'd be really bad off," said Ashbey, whose oil and gas services company was approved for $586,300 last year but still faces a slump in business.
Mo Hair in Baton Rouge was approved for $52,245 last year to help it survive. While some customers have returned, it's not enough to offset costs, Louis said.
"Not only is business not coming back the way it used to be, our expenses have increased for protection purposes," Louis said about buying masks and hiring cleaners to regularly sanitize the salon.
A second forgivable loan would mean "peace of mind," Louis said.
Businesses like Mo hair and Dynamic that already have received Paycheck Protection Program loans are having to wait a bit under phased guidelines for the current program released by the U.S. Small Business Administration. The SBA began processing loan applications on Monday for first-time borrowers — targeting primarily minority-owned and historically disadvantaged businesses who submit applications through community financial institutions.
Those same lenders can begin on Wednesday processing second-round loans for small businesses and nonprofits that have already used up their first loan. The lending portal will be available for other eligible lenders and borrowers in the coming days.
Congress carved out $284 billion for new paycheck protection loans in late December as part of the latest coronavirus relief package. Under funding that ended in early August, more than $525 billion was approved across 5.2 million loans nationwide. In Louisiana, more than $7.6 billion in loans went to nearly 78,000 businesses.
Existing borrowers with no more than 300 employees that have suffered at least a 25% drop in quarterly revenue may be able to receive up to $2 million in a forgivable loan in the latest program. First-time borrowers with no more than 500 employees may get up to a $10 million loan. The five-year loans, based on payroll expenses for either 2019 or 2020, will have an interest rate of 1%. Sixty percent of the loan must be used for payroll to qualify for forgiveness. Companies can use the rest for employee health benefits, mortgage interest, rent, utilities and expenses that are essential to business operations.
Restaurants and other hard-hit businesses, which have been operating with limited capacity for months, could seek a forgivable loan up to 3.5 times monthly payroll costs. All other businesses could get up to 2.5 times monthly payroll.
Applications are due by March 31. Businesses have 24 weeks to spend the money.
Some businesses that received loans previously hope not to again, but may have to depending on whether more restrictions are needed to curb the spread of the coronavirus.
Frank’s Restaurant Grill & Bar in Prairieville was closed for two months last year until the state allowed at least 25% capacity for restaurants to allow diners indoors. The local diner was approved for a paycheck protection loan and used most of the $541,422 to pay employees.
"We are not currently seeking any future funds as of now," said Frank Dedman III, general manager of Frank's. "With our limited capacity and restrictions still in place, we are able to barely manage our funds to keep us operating and paying all of our employees as of now."
Many customers didn't return until the state moved into Phase 3 but then business slowed down when the state rolled back to a modified Phase 2 that was extended Tuesday by Gov. John Bel Edwards because of a spike in coronavirus cases, hospitalizations and deaths in the state.
If the state were to enact more restrictions, the restaurant would seek another paycheck protection loan but even then, it might not be enough to keep the business afloat, Dedman said.
Over at Dynamic Production Services in Lafayette, demand from customers has not rebounded much even as the price of oil has topped $50 per barrel in recent weeks. Instead, extraction businesses are trying to keep costs down.
"They are just running their business with the least amount of workers they can get by with. It's still volatile right now. Oil (prices) can drop out of sight in no time and then we are back where we started," Ashbey said.
Adding to its problems, one of the company's clients with oil platforms in the Gulf of Mexico had shut down production before hurricanes slammed Louisiana in recent months and two of those platforms are still getting repaired and not expected to need his services until May.
Ashbey said a lot of oilfield services companies in the region "just shut their doors" after the pandemic exacerbated a slump in oil prices. Thousands of workers lost their jobs in the Lafayette market. "It was terrible."