How the CARES Act has helped Cincinnati Small Businesses

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Small businesses in the greater Cincinnati area received up to $ 6.9 billion in forgivable loans under the massive CARES bill to bail out the COVID-19 hammered US economy.

It was such an astronomical injection of cash into the region that before the pandemic it would have driven the local economy to a growth rate comparable to that of China.

Instead, the bailout aims to secure nearly half of the jobs in the metropolitan area as the region has been rocked by waves of shop closings, stay-at-home orders, job losses, and mounting economic uncertainty. More than 36,000 employers with almost 485,000 employees received loans.

Local businesses – even some who generally disapprove of further government involvement in the private sector – say the emergency loans have been an essential lifeline to saving jobs and possibly their businesses.

Richard Graeter, fourth generation co-owner of the local icon Graeter’s Ice Cream, sums up the feelings of many entrepreneurs in the first weeks of the pandemic in one word:

“Fear,” said Graeter. He credited the $ 349 billion paycheck protection program overseen by the Federal Small Business Administration to stabilize small businesses like his that borrowed $ 4 million to help with payroll and rent.

Graeter also expressed a cautious outlook for many entrepreneurs as politicians in Washington argue over how the economy can be further boosted.

“When the worst of the pandemic is behind us, we will be fine. But nobody knows – I’m still very worried, ”he said.

“It will eviscerate this industry”

Founded in 1983, Evanston’s bakery The Bonbonerie has steadily expanded to include four neighboring retail stores in the hip O’Bryonville business district to add a coffee shop and tea room.

The full rent for this extended area was still due, although all businesses were closed for eight weeks in the spring. The candy shop used a large portion of the $ 350,000 it borrowed from the PPP program to cover this and pay many recalled workers.

“We used the money pretty quickly … (but) we’d be in a lot of debt if it weren’t for the program,” said co-owner Mary Pat Pace. She added that they also likely closed their cafe because of the reduced sales volume from seat boundaries to maintain social distance.

So far, The Bonbonerie has fought its way back to restore around two thirds of the previous sales level.

But the challenges are diverse: people move, downsize or adjust weddings, for example. In a typical summer, the bakery sells around 15 wedding cakes a week – today it’s two or three.

And the point of going to a café is to sit, have coffee, and linger. The café continues to struggle with fewer seats for guests.

“We’re determined to stay alive and keep making the classic pastries we’ve served in Cincinnati for years,” said Pace.

Prior to COVID-19, less than 2% of chef and restaurateur David Falk’s stores were take-away. Right now it’s his lifeline in Cincinnati as only one of his local concepts, Sotto, is open.

Upstairs from Sotto, Falk uses the kitchen of his Boca restaurant to run the snack bar. While Boca is closed, several popular dishes are also available for take-away on Sotto’s menu. Some of the preparatory work was extended to the spacious Boca dining room to support day-to-day operations.

Thanks in part to PPP funds, Falk was able to call back almost half of his previous 450 employees, but he’s trying to figure out how to run his business when the money runs out. He refuses to call back workers for whom he does not yet have a job.

Falk declined to say how much of the $ 1.5-3.4 million he would accept his restaurants were allowed to borrow. The money was spent on workers, rent and utilities.

“Very few restaurants are set up for gourmet take-out,” explained Falk, adding that he hoped to reopen another popular downtown concept, Nada, in the fall. The Mexican restaurant, which operates in three other states, has already reopened in a few locations outside of Cincinnati.

“We’ll get around somehow, but restaurants – it’ll eviscerate this industry,” said Falk, adding that he is concerned about smaller operators with fewer resources, especially if there are closures in the future.

Falk noticed that a flaw in the calendar cushioned the blow for his business. After a “gangbuster” win for 2019, he was on the verge of paying out most of the money to investors during April tax time – but the coronavirus crisis struck just weeks earlier. His company ended up paying less to investors and keeping some of the cash to weather the downturn.

“PPP helps everyone, but we live on borrowed time … what happens when the money runs out?” asked Falk.

Sales are falling and shifting, forcing companies to adapt

The closure of restaurants, followed by restrictions on retail operations, has impacted other industries such as manufacturers. And while the big food and beverage manufacturers may have solidified distribution in both restaurants and grocery stores, the slowdown in bars and restaurants has forced regional manufacturers to adapt.

Jake Rouse, CEO and co-founder of Braxton Brewing Co., said its sales plummeted by as much as 70% in the depths of shutdowns, which included some of its taprooms. He laid off 50 workers but managed to reinstate most of them, thanks in part to the PPP money. He declined to say how much of the $ 350,000-1 million he was allowed to borrow.

Rouse says the working atmosphere is still “incredibly difficult” and he faces it “day in and day out”. He would support another round of “100%” PPP.

“Despite the opinion of some leaders that this is over – it is not,” said Rouse.

The mass closings of restaurants in Ohio and Kentucky were catastrophic for Glier’s Meats Inc., a legendary local Cincinnati breakfast goetta maker based in Covington, Kentucky.

Sure, half of the sales were in the grocery store, but the other half was in local eateries and other eateries.

“Half of our business just disappeared,” said Dan Glier, company president. “In three days all the restaurants were gone – and I can’t survive with 50% production.”

Fortunately, the show at the grocery store quickly helped restore most of the company’s revenue. Glier’s Meats also received a PPP loan of between $ 150,000 and $ 350,000 to avoid layoffs that would disrupt the business. He even hired two new workers for a total of 30 employees.

“I think it worked … the program took a lot of pressure,” said Glier, adding that he believes his company can do without any additional external injections.

Covering a gaping hole in the economy

When passed by Congress and enacted by President Trump in March, the CARES bill came with a staggering price tag. However, the federal economic data published at the end of July provide a first glimpse of the extent of the unfolding COVID-19 recession.

The U.S. economy contracted in the April-June quarter at the fastest rate ever: a 32.9% decline at an annual rate as $ 2.2 trillion trade just evaporated.

When businesses in the United States closed in the spring to contain the spread of the coronavirus, unemployment more than tripled from March to April – from 7.1 million to 23.1 million unemployed Americans.

With the PPP program, which helps cover the paychecks of millions of workers, nearly 7 million workers have returned to their jobs by July. Federal data released on Friday showed that the US unemployment rate fell from its high of 14.7% in April to 10.2% in July.

Gary Clayton, the chairman of the Department of Commerce and Treasury at Northern Kentucky University, warned that corporate bankruptcies and job losses are likely to increase as the federal government picks up the bailouts.

“I think we are at a turning point in the economy – only the strong will survive if the aid runs out,” Clayton said. “Companies have to adapt.”

Clayton said helping businesses isn’t a cure for their wounds, but rather a blood transfusion that gives businesses time to close their wounds and get back in shape to work in a tougher economy.

Here in Cincinnati, nearly 60 local businesses have received loans between $ 5 million and $ 10 million, according to the Small Business Administration. For companies named by the SBA as loan approval recipients, the federal authority has not disclosed final loan amounts, but areas of loan approval.

In a separate disclosure, the SBA declined to identify more than 30,000 local loans that received loans of less than $ 150,000. Some accepted amounts up to $ 100.

Which employers in the region borrowed the most money?

  • Nearly 850 manufacturers (including Braxton and Glier’s) employing more than 46,000 workers have been approved for loans ranging from $ 445 million to $ 1 billion
  • Nearly 900 restaurants, hotels and retailers (including more than 100 car dealerships) with 65,000 employees were given the green light for $ 350 million to $ 830 million
  • More than 700 health or social care providers (including more than 100 nonprofits) with 48,000 employees received loans between $ 300 million and $ 750 million.

Do you remember all of the elective surgeries that were postponed during the lockdown? Lasik surgery provider LCA-Vision, with nearly 500 local employees, has been approved for a $ 5 to 10 million loan.

  • More than 700 construction companies employing 30,000 people received loans between $ 290 million and $ 710 million.
  • More than 700 professional firms with 28,000 employees received loans between $ 295 million and $ 705 million.

For the latest information on doing business in Cincinnati, follow P&G, Kroger and Fifth Third Bank @alexcoolidge on twitter.


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