Utahns can now apply for disaster loan assistance because of the coronavirus pandemic, the U.S. Small Business Administration announced on Tuesday.
The change comes after Gov. Gary Herbert requested on Monday a declaration of disaster from the federal agency. To date, Utah is one of roughly two dozen states that has requested assistance from the SBA as the pandemic cripples U.S. businesses.
The loans are available to the owners of small businesses and private nonprofits in Utah and other qualifying states who meet certain credit and collateral criteria. Eligible candidates can submit their applications via an online portal on the SBA website.
Processing time for applications is between 10 days and two weeks. But wait times may extend as more states become eligible for the program, said Marla Trollan, the director of the agency’s Utah district office.
“The sooner that our Utah small businesses can get their applications in, the better,” she said.
Eligible small business and nonprofit owners can apply for loans of up to $2 million per person. That money can go towards paying fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rates are 3.75% for small businesses and 2.75% for non-profits.
The program might be too little, too late for people like Greg Federman, who co-owns Xetava Gardens Cafe in Ivins.
Federman and his wife laid off their entire staff on Tuesday after the Governor’s Office ordered Utah bars and restaurants to suspend dine-in service.
“Because we are a remote restaurant, there is no way to-go orders will keep us afloat, so we are closing completely for the duration of this so that our staff can get unemployment immediately,” the co-owners explained in a Facebook post.
Instead, the couple has converted their cafe into a relief site and launched a GoFundMe page that has raised over $7,000 for out-of-work restaurant personnel across Southern Utah.
Federman said that offering loans rather than grants may make it impossible for small businesses to get back on their feet — if and when they can reopen.
“If they’re still suffering from no income for two weeks, four weeks, eight weeks, how are they going to get ahead when they’ve got double bills to pay for the next however long? That’s where I get confused,” he said.
Though Federman doesn’t see the benefits of the disaster relief loans, he acknowledged the program may be helpful to business owners in different situations.
Springdale Mayor Stan Smith shared his concerns.
The town, which relies heavily on tourism traffic to Zion National Park, has already seen three hotels shut down and between 70% and 80% cancellation rates in hotels that have stayed open.
Smith said that he had mixed feelings about the ability of disaster loans to shield business owners from economic fallout.
“On the one side, that’s great. But on the other side, it’s still a loan. You’re still going to have to pay it back,” he said. “So it’s not a quick recovery.”