‘A recession, let alone a depression’: Western Nevada County businesses apply for federal loans, but most have yet to receive money | TheUnion.com
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‘A recession, let alone a depression’: Western Nevada County businesses apply for federal loans, but most have yet to receive money

Sam Corey
Staff Writer

Pete’s Pizza & Tap House in downtown Grass Valley is like many other businesses having to navigate the coronavirus pandemic.

Forced to close due to the spread of the virus, Pete’s is a small business that operates on small margins and employs a small number of people. Now, closed, the pizzeria’s co-owner Lorri Flores said she — like many other Nevada County small businesses — conducted a deep, professional clean of her storefront and applied for federal Paycheck Protection Program loans.

And, like many other small businesses in the area, she’s yet to receive those federal dollars.

Nationwide, the California businesses received some of the lowest approval distribution rates of federal small business loans, according to a report by Bloomberg News.

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“We’re going to see hundreds of thousands of small businesses go bankrupt. It’s a crisis …”Lorri Flores, Pete’s Pizza co-owner

While the Nevada City Chamber of Commerce and Grass Valley Downtown Association have both issued surveys to unveil how many businesses have applied for, and received, federal loans, that data has not yet been completely compiled. But according to many local economic organizations, the money hasn’t reached many businesses in Nevada County.

Sierra Business Council Vice President Kristin York said a very small percentage of small businesses — likely around 10% of the over 200 she’s worked with — have received federal loans from the first stimulus package. Small businesses across the country had difficulty acquiring federal loans during the first round of a congressional stimulus package that was purportedly meant to reach them.

Nevada County Economic Resource Council Executive Director Tim Corkins agreed.

“We’ve heard very few people have got funding on any of those levels,” he said. “It was quite a mad-dash to the banks.”

Within just weeks, the small business loan program, which was part of the largest stimulus bill in U.S. history, ran out of funding. The result has bred annoyance from small businesses in the area.

“I know that there is frustration,” said Grass Valley Chamber of Commerce CEO Robin Davies.

But, York noted that many businesses who got into the pipeline early to receive funding for the first round are likely to actually acquire the funding in the second round of a federal stimulus package, a $484 billion bill signed Friday by President Trump.

While helpful, small business loans from the federal government are not a panacea for the current financial woes, said York, even though some loans, if criteria is met, can be forgiven.

“Without knowing when the economy is going to reopen, that can be a gamble,” she said. “It’s not free money.”

Flores agreed, comparing the federal loans to a 30-year mortgage. The Pete’s Pizza co-owner also received $10,000 of disaster loan money from the federal government, but she’s afraid to touch as it’s not eligible to be forgiven.

Even for those who are able to receive funding from the federal government, Flores said she’s afraid for the future — for both businesses and residents. When the economy begins to return to a more normal pace, Flores is concerned the downturn will only worsen.

“It’s not going to be the same,” she said. “It’s very scary.”

SERVICE INDUSTRY DISTRESSED

Of those who reported their operations to the Downtown Grass Valley Association — a list that includes over 200 businesses — most have remained semi-open, making online sales, or engaging in things like carry-out and curbside pick up options.

The majority of these businesses include retail, restaurants or beauty shops (salons and barbers). A sizable minority of these spaces have temporarily closed.

Those currently operating in the service sector are distressed, said Corkins, including auto repair shops, which, while essential, have experienced a dip in customers.

In general, whether businesses stay open is mostly determined by their current financial structure, said Corkins of the ERC. Restaurants and retail shops that are operating are not making a killing, but merely staying afloat.

“They’ve got take-out going, but it’s not enough to pay all the bills,” he said. To stay open, businesses are having to ask themselves: “Is it cheaper to not have anyone work and just pay your fixed expenses?’” Corkins said. “Everybody’s different. It just depends on their fixed expenses.”

While Grass Valley’s Jimboy’s Tacos and Nevada City’s Industrial closed permanently and the LeeAnn Brook Fine Art gallery closed its Broad Street location in Nevada City.

Davies of the Grass Valley Chamber said she hasn’t heard of any of the chamber’s members closing shop. But the economic crunch has already begun to hit the chamber’s operations, said Davies.

“I have no staff; my membership liaison has been furloughed,” she said. “We’re all in the same boat. We’re all suffering some type of blow from this coronavirus pandemic.”

When businesses return to more regular operations in coming weeks or months, many will still be experiencing a slower pace of business due to presumptive social distancing guidelines, which will allow for fewer seating options and lower levels of customer congregation at one time, said York.

Lorri Flores anticipates many businesses in the restaurant, travel and hotel industries going under as a consequence of the prolonged slowdown and not being able to pay rent.

“We’re going to see hundreds of thousands of small businesses go bankrupt,” she said. “It’s a crisis, it could be a recession, let alone a depression.”

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‘A sudden and dramatic downturn’: Nevada County economy will be hurt for longtime following coronavirus slowdown, expert says

‘A recession, let alone a depression’: Western Nevada County businesses apply for federal loans, but most have yet to receive money

Nevada County businesses, governments, nonprofits navigate uncertain times, worry what’s ahead

RELATED RESOURCES

http://www.TheUnion.com/coronavirus

http://www.MyNevadaCounty.com/coronavirus

Coronavirus Guidance for Businesses/Employers

Nevada County Relief Fund for Covid-19

To contact Staff Writer Sam Corey email scorey@theunion.com or call 530-477-4219.


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