Episode 45: Small Business Adminstration

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A transcript, lightly edited for clarity and length, follows.

Show Guests: Julie Clowes, District Director of the Small Business Administration's San Francisco District Office

Voices of the Community Introduction: Welcome to voices of the community which explores critical issues facing Northern California communities. We introduce you to the voices of community thought leaders and change makers who are working on solutions that face our fellow individual community members neighborhoods cities and our region. This is George Koster your host. 

Series Introduction: This episode is part of our series exploring COVID-19’s impact on nonprofits and small businesses in San Francisco. Back in April 2020 when we decided to create this ongoing series on Covid-19’s impact first on nonprofits and then on small businesses in the San Francisco Bay. We like you had no idea how long the pandemic would go on and what the health and economic impact would be on our community. Going into 2021 the pandemic is now killing more people, shutting down more nonprofits and small businesses, along with wiping out the lively hoods of families, neighborhoods and communities.

We will continue to shine a spotlight on the nonprofits, and small businesses that make up the fabric of our community along with the founders and staff who are struggling to deal with the impact of the COVID 19 pandemic on their operations, services and sustainability until we can all get to the other side of the pandemic. Along the way, we will also share with you all the amazing solutions that our nonprofits, small businesses, foundations, and government leaders are working on to help us all get to the other side of the pandemic and come together to rebuild our communities with more economic, social and environmental equality

Show Guest Julie: What is very clear is that business owners are challenged right now in a way they never have been, you know, I'm open, I'm closed, I'm indoors, I'm outdoors. You know, PPE, what is it? What do I do with it? Who do I give it to? So many challenges right now. And our goal is to really help as many of these small businesses, whether , this storm, so to speak as best we can. And for that reason, I like to encourage the businesses to reach out to us, you know, especially work with a business advisor.  

Episode Intro - Show Host George: This is the District Director of the Small Business Administration's San Francisco District Office Julie Clowes. Over the ten plus months we have been sharing the voices of small businesses and COVID-19’s devastating impact on their survival. With the latest round of federal funds now being deployed we wanted to host Julie to help guide our listeners through the funding opportunities available to both nonprofits and small businesses

Show Host George: I'm joined remotely via zoom by Julie Clowes, the District Director of the Small Business Administration's San Francisco District Office. Thank you for being here, Julie.

Show Guest Julie: Thank you for the invitation

George:  I think the SBA is kind of one of those government, departments that for a lot of people, see it as a black box where it's going to require all these forms, all this information I don't have. So, I think it would really be helpful if you could provide a background on the SBA here in San Francisco, that's the district that you manage and how you work with small businesses and really now nonprofits.

Julie Clowes: Absolutely. I do think there's a lot of preconceived notions about who SBA is, what they do and who we help. But we are a federal agency. We're an independent agency and our sole mission is to help businesses start and grow and continue to prosper. And we do that offering a variety of programs and services can kind of break those into four buckets as an easy way to talk about it. So, there's the access to capital bucket, which maybe we're most known for, but we actually have programs that go from microfinancing loans of $50,000 or less all the way on, up through venture capital.

And then our bread-and-butter program kind of is our loan guarantee program, which is loans through commercial lenders up to 5 million. We also have government contracting assistance, so we help with federal certifications. We actually work behind the scenes with other agencies trying to get them to utilize small businesses as their contractors.

So, we do a lot to help small businesses kind of break into federal contracting and be successful. The third bucket we have is business advising. Free business counseling and low and no cost training. And honestly, I think this is probably the most invaluable service SBA offers. So, through our network of grants and resource providers, you may have heard Small Business Development Center SCORE Women Business Centers and a Veteran Business Outreach Center. We provide free business advising and, you know, especially in this challenging, challenging times right now, this is an invaluable resource for businesses.  You will never be charged for the advising services and you can talk about any issue that you have that's pressing or if you want to strategize with somebody, look at them as a free, Advisor to help you think about your future and how you weather the rest of this COVID pandemic.

And then the fourth bucket, which has kind of been the theme for the last year is our Disaster Assistance Program.  We typically will go in on declared disasters and provide financial support, loan support to cover uninsured losses and to help with economic injury for small businesses and nonprofits that is now become kind of the focal point of the assistance, the COVID recovery assistance for small businesses and nonprofits. So as a District Office, we're here to kind of administer some of these programs, do some oversight, but really more of a grassroots level of SBA, engage with the community, engage with our small businesses and make sure that they are tapped into the resources that can benefit their business.

George: Thank you. That was a really great overview.  I think   one of the big questions that people have is does anyone know how many small businesses, in San Francisco and, or the San Francisco, SBA district that you're working with have actually either gone out of business or, estimate would go out of business. So, I know it's one of those moving targets, what are your thoughts?

Julie Clowes: Right. It's a question I get asked a lot actually. And unfortunately, it's not data that we track as SBA or that I think we even have a reliable source to give us, you know, real-time data. What is very clear is that business owners are challenged right now in a way they never have been, you know, I'm open, I'm closed, I'm indoors, I'm outdoors.

You know, PPE, what is it? What do I do with it? Who do I give it to? So many challenges right now. And our goal is to really help as many of these small businesses, whether, this storm, so to speak as best we can. And for that reason, I like to encourage the businesses to reach out to us, you know, especially work with a business advisor.

Let us help you navigate through COVID understand the rules, understand what programs you might benefit from whether they are from SBA directly or whether it's from States or local partners. There's a lot of information out there and I think the one thing I love businesses to take away from this is that they can reach out to us. They don't have to do it by themselves. Let us please help you.

George: That's a great segue into one of the reasons I wanted to have you on the show was, we had, for lack of a better term Cares Act Two right rollout finally, on December 27th. And now it includes more funds for non-profits small businesses, there's a whole shuttered venue. Which means a lot for some of the folks that have been on the show like ZSPACE, for example, or Music at Kohl Mansion. So, could you walk the audience through, what are some of the programs?

And I think everybody's heard about the PPP program, but there is the, and everyone loves acronyms, an E I D L and then an E I D L Advanced or slash target. Could you walk us through, like, what are some of the programs right now that are available and then we'll segue into some of the common issues that you've seen folks struggle with.

Julie Clowes: Sure, absolutely. There is a myriad of programs out there right now. Some are programs you might have been familiar with, this past summer and others are new. So, I like to break them into two different categories of programs, one being like debt deferment and relief programs and the other bucket being loans and grants.

One of the things that gets very little attention and all I think is a tremendous benefit is the SBA debt relief program. That's actually where SBA is paying principal and interest payments on existing SBA debt holders. So, they could be through our 7a program, our 504 or even our Micro Lending program.

So, from when the cares act was first introduced in March, the program, I think launched in April of 2020, and we were able to pay six months’ worth of principal and interest payments for these businesses. So, this is better than a deferment, right? This is an actual payment. That program has been reauthorized and refunded with the most recent legislation from December.

And so, we are reopening that program to pay additional months for existing debt holders. And then there's also going to be a pathway for some new debt holders to enroll. And also, some people that fit targeted parameters smaller businesses, minority owned et cetera, will also have additional options to have additional payments made for them on their debt as well.  

But talking about the loans in the grant programs obviously a paycheck protection program has received probably the most press, but it is not the only program. And, I dare say for some businesses, it's not even the best program for them. It's maybe not the best fit, but that one is now available open any participating lender can submit applications to SBA. The unique twist this time around is that it's open, not only for people to apply for their very first PPP loan, but if you had already received a PPP loan in 2020, and you meet the new criteria you can also apply for a second PPP loan. To apply for your second PPP loan, we are going to look at some additional eligibility criteria we're trying to target the hardest hit businesses. So it includes not only being an eligible entity of which a lot more non-profits are now eligible as well. So that's good news.

You have to also have 300 or less employees. And you also have to show a reduction in your gross receipts between 2019 and 2020. So, the second PPP loan is an option for many businesses, but there, is going to be additional demonstration of the need for those businesses. So that again, open, for any participating lender is now available to submit applications.

The EIDL program or Economic Injury Disaster Loan program, was the first program out the gate in March of 2020 and continues. It remains open, for people to apply for their first time. Unfortunately, at this time there's no ability to apply for a second loan, but any first-time applicants can still apply.

The difference between this one and the PPP, is that it is a working capital loan. So, it can be used for pretty much any business expenses where PPP is obviously focused on payroll, although you can use it for some other authorized expenses. The EIDL program is really working capital for any of your business expenses, including payroll.

And that one is, a loan it does not have a forgiveness component like the PPP program, but it is on very favorable terms. So, 3.7, 5% interest for small businesses and 2.7, 5% for nonprofits with an automatic 30 year term. So that is a loan you would apply for it directly from SBA on our website.

And then we have two new programs that are coming down the pike that are both grants. So, the shuttered venue operators, grant is starting to get some publicity. And that is something that's not yet open for anybody to apply, but we do have a lot of information available on our website, the sba.gov, and we will continue to be putting information out about that. It is a brand-new program, so you know, it does take a little bit of implementation before we launch.

But there is enough information on our website I think you can go in, see if you think you qualify for it. And then how to calculate how much you might be eligible for under this program. So again, you can start getting some information so that if you qualify, you can start to make decisions about whether this program or one of the other programs might be best suited for your needs for your business.

 The Targeted EIDL Advance is the other one that is similarly named to the EIDL Advance that was available in the summer of 2020 until it ran out of funding. But I do like to point out to people that it really is a different program. So, the Economic Aid Act that was passed in December created this. I would say its maybe a, cousin of the EIDL Advanced program that was available this past summer.

So, it is a program that is not open for applications just yet, but I do encourage businesses to go and look at the website again, sba.gov. And start to look at the parameters about how this program is going to come available, when it is it's going to open in phases, and you will see that this targeted EIDL advanced grant is only available for businesses that meet certain criteria. So, the low-income areas and showing the revenue reduction again between 2019 and 2020. SBA will actually be messaging a lot of our prior EIDL Advance, recipients and or applicants before the funding ran out. So, I do want people to go read the details to see how this program is expected to be unveiled and know that if they had applied for an EIDL Advance in the summer in 2020, and maybe did not get the full $10,000, they should receive a direct message from SBA with further instructions related to the Targeted EIDL Advance.

And then similarly, if they applied for the EIDL Advance but the funding ran out before we were able to make an award to them. Those individuals and businesses will also be messaged directly. So, there's still a lot happening. There's a lot that's available today. You could apply for the EIDL Program the EIDL Loan. You could also apply for a PPP loan, whether it's your first one or your second one the two grant programs though are not yet open for applications.

George: Thank you. That was a lot of really wonderful information shoved into a very small amount of time. I want to turn to you and your staff, obviously, to your point, working with lots of small businesses and now small non-profits, what are some of the common issues that you and your staff have identified that people struggle with? And also, how can folks prepare to make the process easier and then hopefully more successful.

Julie Clowes: Sure. You know, I think the issues tend to morph over time. As we go through the process, we're seeing different types of questions. We still do see a fundamental problem with trying to figure out which program, like understanding, what is EIDL all about? What is PPP all about and how do I figure out which of these programs is best for my business? As it's easy to do with all this information being pushed out at people on a constant basis it is easy to confuse the two and maybe not fully understand which program they're actually applying for.

So, we've been helping people understand that. Also, with the EIDL program, some businesses were declined, and they received a letter to, as such, but. With the EIDL program, a decline is not necessarily fatal. It's really SBA saying, we need more information about you before we can make the loan decision.

So, they have a reconsideration process, and this is confusing for a lot of borrowers because they've, you know, they've had a loan decline, they think they're done, but there is a process and we're trying to help a lot of those borrowers understand, you know, what additional paperwork or information SBA needs and how they can submit that. That's been a big part of what we've been helping with in the last several months as well.

Then also just helping people find the right resources when the PPP program was launched in April in 2020, you know, the big push was how do I find a bank that's offering the program? And it did highlight a problem that a lot of small businesses were unbanked. And so trying to find resources, you know, maybe non-traditional financial resources that were eligible to offer the PPP program to match them with those resources so that they would have access to the program.

And the, some of that still continues today with this relaunch, if you will, of the PPP program. I think there's a lot that businesses can do, even if you're looking at the shuttered venue operators grant, for example, it's not open yet. Tips that I would say is please prepare and make sure you have your 2020 financial statements.

I would make sure you have that and have those ready for pretty much any of the programs you're going to apply for, you're going to need your 2020 financials. If you are having difficulty putting those together, or, you know, maybe you, have financials, but you're not as familiar with working with them. This will be a good time to reach out to one of our business advisors also to let them help you take a look at what you've assembled. Take a look at your 2019 financials and your 2020. So, you can start making some of those calculations about revenue reduction, et cetera.

So that you do have that information readily available to you when you either want to apply for PPP Two, for example, or the Shuttered Venue Operators Grant. I also do recommend that, even though your 2020 tax returns are not due. You might want to do a draft version of those of your 2020 tax returns.

I'm not saying that you have to submit them to the IRS just yet. But I would go through the exercise of assembling a draft version of your 2020 tax returns. In case you do need to produce them as supporting evidence for any of these programs. And then lastly, the one other piece kind of prep piece, if you will, for anybody interested in the Shuttered Venue Operators Grant in particular, I do encourage them to go register their business or their nonprofit in sam.gov.

And that is, the systems of award management, Sam like the name dot gov it's free. It doesn't cost anything to register in the system, but it might take you a minute. It's pretty much just your standard business information, but you know, some people think it's not the most intuitive system in the world.

So, this is going to be an important component for applying for this grant. So, I do recommend businesses go ahead and do that now, even if they're just thinking about it, go ahead and take that registration piece off your plate. We will be doing some webinars and workshops to try to help people understand how to register in sam dot gov.

 It's the central database that anybody, business, nonprofit, anyone who wants to do business with the federal government, whether it be selling to the government receiving grants, et cetera, everyone needs to register in this. So, it's not anything unique, but it's probably something, a lot of businesses never contemplated or considered before, so that's another tip to get ready.

George: That's great. So, go to your website to sign up for those webinars. I know you've been also partnering with, CalNonprofits, for example. And the folks at California For the Arts, is another one that you were working on.

Julie Clowes: Yes, and we’re definitely, you know, messaging our partners, especially when we have new resources available and the webinars, we will definitely be blasting out that information. People can also sign up for our district office newsletter so we can, you know push information out to them, if they don't want to have to go and scan the sba dot gov website constantly.

George: Thank you. Great information. So, I'd love to have you share with the audience, one of your favorite moments of working with small business, clients and helping them secure funding. And what do you feel that has an impact on our community?

Julie Clowes: Yeah, I have so many stories. I was thinking about the businesses that we have been able to assist and, we’ve had a lot of you know what maybe people even think of as not a small businesspeople that have hundreds of employees, but they are a small business. And so, helping them get their PPP loan, for example, obviously makes a big community impact because hundreds of people were able to remain employed.

But I have to say often working with these really small businesses who maybe have never applied for a loan or financial assistance before have a lot of questions are really a little bit nervous and fearful about the process and really being able to get them through especially restaurants.

We've had a lot of restaurants that we've worked with.  In addition to trying to understand the rules and ways that they can or can't operate, you know, now they're trying to apply for assistance and really some of them have needed some extra hand holding. So, we've been able to work with them.

And some nonprofits I've had a healthcare non-profit who was working with under-served communities. And they were really nervous about the PPP loan application process as well and was able to work with them and they got the financing, and they were so grateful. For them it made the difference between really shutting down or streamlining and offering very few services.

And this is a healthcare organization in the middle of a pandemic. We don't want them shutting down right, we want them to be providing services to these vulnerable communities that they work with. So that was a real like happy moment to be able to know that some of these things could continue without disruption.

 But there's a lot of stories and I had one woman who she actually was able to get the debt relief program that I was talking about. She had just bought a new building for her business and was retrofitting it and all of that when the pandemic hit, so construction became a challenge, and she was afraid she wouldn't meet her deadlines in order to have the loan.

And we were able to work the lender and with her, and then with the city, with some of the permitting departments and make sure everybody had the information. And we were able to enroll her in that program. And she's actually ones that made me teary-eyed because she emailed me. And she's like, you know, after all of this, she's like, I think I forgot to say thank you.

But she was like, thank you, thank you. She's like, I only bug you when I have a problem, but you really saved my business. And I’m still getting choked up, even talking about it. So, like that, that's the kind of stories that I, you know, that's why we do what we do.

George: Thank you. Wonderful story. So much of our small businesses and nonprofits have such an amazing impact on our community, which leads me to my final question, and that is what are some of the positive things that you could see coming out of the crisis to support our small businesses and non-profits and help them secure funds? And perhaps more alignment of partnerships between federal agencies, like the SBA and our San Francisco Mayor's Office of Workforce and Economic Development, for example, our chamber of commerce. So, what are some of the great things you could see coming out of this?

Julie Clowes: Sure, think I boil it down to two different things. innovation being one, these kinds of conditions while they're incredibly challenging. You know, they also are forcing us to do business differently or to operate differently.

And I think with that kind of environment comes a lot of innovation. And so, we haven't heard a lot of conversation about it, but the new ideas that will be sparked the new businesses that can be launched out of the new ideas that come out of a phase like this, when we've all been impacted at work and at home.

And I think the second topic is collaboration. And I've seen that in a lot of different fronts. I mean I’ve seen it between businesses. I think I've seen small businesses collaborating with each other in a way that I haven't witnessed before really trying to support each other as opposed to just being competitors.

Because I think they see, you know everybody will benefit if they can support each other. But that also lends into collaboration, like you mentioned, with the other, resource providers, whether it's federal, state, and local. And really having conversations about how we put our programs together so that we can provide, you know, a package or uh well-rounded support for our small business community.

And I think as we are, hopefully coming out of this pandemic, emerging out of this we can have some serious conversations about what the future looks like. How do we leverage the programs that exist? And if there's new programs that need to be created to meet certain needs that are coming out and emerging in 2021, as businesses are trying to not only surviving this pandemic but go back to thriving. And looking at the landscapes. If you look at a city like San Francisco, it's going to have some dramatic changes because of this pandemic. And again, how can we support these businesses that are still here, help new businesses emerge and keep our small business community thriving.

George: Thank you, great ideas. And I'm hoping that we can bring all of the players together to provide a much easier ecosystem for our small businesses and nonprofits to engage in and get the support they need.

I want to thank you so much, Julie, for sharing all of the wonderful work that you and your team at SBA San Francisco District Office are doing to support our small businesses and nonprofits. And we'll make sure that our viewers and listeners have the contact information, your website and social media, and that way folks can hopefully follow the SBA in all your work here and, get more people to engage in the SBA and, all of the new programs. With the new administration, it sounds like there may be another round of financing coming out who knows maybe in the springtime, to help, folks, bridge between now and the fall. Assuming that we can get to that point where we have herd immunity and folks can actually show up again and go to restaurants inside and go to theaters and hang out.

Julie Clowes: Yes. Yes. I think we're all hoping for that, [laughter laugher] but I think, yeah, I think we're going to see a lot of activity this year. And so that's why I tell people to stay engaged and tap into our resources and work with us so that you can stay in the know, so to speak on the resources that you can take advantage of.

George: All right. Well, stay safe out there. And our strange new normal with, a pandemic raging economic meltdown in vaccines going slow. But you know, at least we're headed in the right direction.

Julie Clowes: Yes. Well, thank you. Thank you for the conversation today. 

Episode Outro - Show Host George: That’s it for this episode of voices of the community. You have been listening to the voice of Julie Clowes, the District Director of the Small Business. Administration's San Francisco District Office. To find out more about the Small Business. Administration's service and funding programs go to S B A dot gov

Series Outro: We hope that you enjoy the insights, points of view, and personal stories from the voices of change-makers and their nonprofits and small businesses featured in this series. To find out more and get engaged with the nonprofits, small businesses and staff members, featured in this series please go to my web site george koster dot com and click on Voices of the Community to find links to the extended versions of these interviews and to listen to the entire series. After listening to these stories we hope that you will consider making a donation and volunteering to provide a hand up to your fellow community members.

Series Credits: I want to thank my associate producer Eric Estrada, and Kasey Nance at Citron Studios, along with the wonderful crew at the San Francisco Public Press and KSFP.

Voices of the Community is a member of Intersection for the Arts which allows us to offer you a tax deduction for your contributions. Please go to George Koster dot com and click on the donate link to make a donation to help us provide future shows just like this one. While you are on our web site you can enjoy our archived past shows which feature community voices working on solutions to critical issues facing Northern California communities, and sign up for our newsletter to find out about our future shows as well as shows and events from the organizations that our included in our episodes

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