Laurie’s Shoes hopes to bring back four laid-off employees. Victory Raceway is looking for a way to keep paying workers while the entertainment complex is shut down. Hair Saloon for Men wants its staff ready to go when it’s allowed to start cutting hair again.
The three are among thousands of St. Louis-area businesses eligible for $350 billion in forgivable loans that Congress authorized as part of a $2 trillion relief package. Local bankers say they expect strong demand for the program.
“Most of our clients are anticipating wanting to submit applications for this program,” said Danny Pogue, executive vice president at Midwest BankCentre. “Most have employees they want to keep employed.”
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Meg Schneithorst, St. Louis region president for Enterprise Bank & Trust, said more than 2,000 business owners signed up for a webinar about the loans. “Business owners are focused on how they can keep people employed and paid,” she said. “Their employees feel like family to them.”
Tom Twellman Sr., chief executive of Hair Saloon for Men, planned to apply Friday, the first day applications were being accepted. His company agreed to pay employees for two weeks after the coronavirus pandemic forced its salons to close March 21, and the Paycheck Protection Program loan would cover payrolls for two more months.
As for the company, the loan wouldn’t cover all of its expenses. “My concern is, how long is this going to go on?” Twellman said. “We can’t survive without any revenue coming in.”
Mike Johnson spent more than $100,000 to add a virtual reality room at Victory Raceway, his indoor go-kart track in Crestwood. The room opened March 12; he had to close a week later.
Johnson let 15 part-time employees go, but he’s keeping four full-timers busy with painting and maintenance projects. He can’t afford to pay them past the end of April.
A forgivable loan would let him keep the valued employees, but he’s still deciding whether to apply. “I’d still be losing money each month because of my overhead,” he said. “We could open in a month or we could open in a year. It is a tricky situation and I’m trying to make the right decision.”
Mark Waldman, president of Laurie’s Shoes, definitely plans to apply. The Glendale retailer, which also owns a Birkenstock store in Creve Coeur, is selling shoes online and by phone with curbside pickup. Waldman says revenue is about 30% of normal.
Laurie’s furloughed four full-time workers when it had to stop making in-store sales, but Waldman says he’ll bring them back when the loan comes through. He figures people will need shoes when the pandemic is over — especially health care and grocery workers who have spent many hours on their feet.
“We think there will be pent-up demand,” he said. “You have to look at this as positively as you can.”
Peter Boumgarden, a professor of strategy and organization at Washington University’s Olin Business School, says applying for the Paycheck Protection Program isn’t an easy decision. The loans fund payroll for eight weeks but the debt is forgiven only for as long as employees are paid.
“The risk that’s in play is that things don’t return to normal by June 1,” Boumgarden said. “If you think your revenues are going to be less than 100% after that, you must think hard about it.”
Bankers, though, say their small-business customers are eager to grab this federal lifeline. Travis Liebig, CEO of St. Louis Bank, said he knew of at least 300 business clients who planned to apply, “and those are just the ones who were really paying attention. I think the tidal wave will continue.”
If the government gives them clear guidance, the bankers say, they’ll approve loans quickly. It’s a heavy lift, though: the $350 billion authorization is 15 times what the Small Business Administration lent last year through its flagship program.
Midwest BankCentre organized two task forces to prepare for the flood of applications, and Pogue says nearly every employee will be involved in some way. “This situation is something we haven’t seen before,” he said. “If we can’t get them the loans quickly, it will be difficult for some small businesses to survive.”
This column was updated April 6 to correct confusing information about loan forgiveness.