‘All your dreams get crushed.’ Charlotte businesses on the brink try to survive
CHARLOTTE, N.C. (Charlotte Observer) - With the Charlotte economy shut down to prevent the spread of the new coronavirus, small businesses have been stretching their dollars, hoping to make it through to the coming recovery. But some are already finding that they might not be able to make it.
While it’s anticipated that demand for hotels, restaurants and other parts of the economy will come back, and along with it many of the lost jobs, companies still have to pay bills in the meantime.
And with small-business aid slow to be distributed or hard to access, some are finding the light at the end of the recession out of reach.
One of the first casualties of the economic contraction was Lemon Love, a nail spa which opened in uptown in 2019. With most nail spas and other salons shuttered, owner Tracy Martin said in an Instagram post last Friday that the spa wouldn’t re-open after the pandemic.
“Please continue to reach and support these businesses, there are so many that have put their entire lives and savings into their brand and business, including myself and trust me when I say they need to know that you still care,” she wrote.
Charlotte’s small-businesses will be the hardest hit from the economic slowdown, most officials agree.
There are 28,798 businesses in Mecklenburg County with fewer than 50 employees, according to county data. It’s likely that a year from now that number will be significantly lower.
“Every time there’s a downturn, the weakest of the businesses aren’t going to be able to survive,” said John Connaughton, an economics professor at UNC Charlotte.
SUSTENANCE, NOT STIMULUS
Most of the aid to small businesses has been discussed as stimulus. In reality, the loans and grants to mom-and-pop restaurants and local body shops aren’t going to grow the economy, but rather just keep businesses as current as possible.
Policymakers are trying to make it as smooth as they can for a business to ramp back up when commerce gets going again. That’s much easier for businesses if they kept their lease or kept paying their workers.
“Idling a business is a lot easier in the long term than raising it from the dead,” said Chad Turner, president of the Charlotte LGBT Chamber of Commerce.
But just staying afloat when your doors are closed can be a full-time job.
Hollis Nixon, whose business Core Concrete creates custom countertops and sinks, has spent almost all of her time lately trying to get aid for her and her business.
“I’m just tired. This is exhausting. It’s more hours than a full time job,” she said. “As soon as applications are released, whether it’s midnight or 4 a.m., I hop on the computer immediately.”
Her business, which has three employees, has seen its new income drop to zero. No one needs a new bar for their restaurant when all the bars are closed. She’s applied for everything that could possibly help her get through the downturn, including federal funds, emergency grants and regional grants.
Like thousands of other business owners, Hollis doesn’t know which of the things she applied for she’ll get. It’s nerve wracking. “You don’t know what’s gonna come through, how much it’s going to be, when it’s gonna come through,” she said.
Compounding the challenge of keeping small businesses from shuttering forever is a local response criticized as insignificant and a federal response beset by technical glitches and access issues.
Hundreds of billions of dollars in small-business aid have been approved by Congress, but many small business owners have reported challenges in finding banks from which to get loans.
Once they do find a bank, usually after some difficulty, they’re stuck waiting on a federal system that has been plagued by technical issues and downtime.
For a few days, many Wells Fargo customers were effectively shut out of the program because the bank had hit a regulatory cap on its assets. The Federal Reserve relaxed that cap Wednesday, letting the bank participate fully.
“Those very small businesses that probably need the help the most may not be able to devote the time and resources to navigate a complex system designed to help them that is proving itself to be difficult for even large banks,” said Stephanie Few, a Charleston-based partner at the law firm Womble Bond Dickinson.
“How many closed their doors before they were able to start the process?” Few said.
On top of that, the $349 billion federal small business aid program, known as the Paycheck Protection Program, is so in demand it will likely run out of funds soon. There’s widespread support in Congress to pump more funds into it, but lawmakers have yet to come to an agreement.
The response to the economic crisis from Charlotte-Mecklenburg leaders has also been small, when compared to what other municipalities in the area have put together.
Mecklenburg County passed a $5 million package to provide small businesses with low-interest loans Tuesday. That program would provide, if each loan were the maximum amount of $35,000, roughly 142 loans total.
Despite its approval by an 8 to 1 vote, many county commissioners did not believe the program did close enough to prevent small businesses from shuttering.
“I just think it’s such a drop in the bucket.” said commissioner Susan Rodriguez-McDowell at the Tuesday meeting. She voted in favor of the program.
“I’m not sure what the alternative is, but what I’m saying is this is such a crisis for so many people and this just doesn’t touch it. It’s like putting a Band-Aid on — it’s not even big enough to be called a Band-Aid it’s so tiny,” she said.
Commissioner Pat Cotham voted against the proposal because she thought it was too insignificant to help many small businesses.
“I just worry they’re going to be left behind,” she said at the Tuesday meeting.
While other municipalities, including Gaston County, have put together packages in the tens of millions of dollars, the city of Charlotte hasn’t put together a comparable relief package.
The city council plans to vote on a $1 million micro-business loan program on Monday. But some officials, including city manager Marcus Jones, don’t want to construct a major program until the scale of federal and state aid to the city is known.
With funding from Raleigh and Washington weeks away and businesses suffering right now, that program may come too late for many.
THE WAITING GAME
In the meantime for small businesses, whether it’s on their own or with government support, they’re stuck in an insufferable waiting game.
Frank La Fragola Jr. had spent the last year investing about $3 million into a second location of his Matthews restaurant, Jekyll & Hyde Taphouse and Grill, in Belmont.
A staff of roughly 60 were trained. The grand opening was set for March 19. But on March 17, Gov. Roy Cooper ordered all bars and dining rooms closed for everything except take-out.
“You’ve been waiting the entire year for this to happen. And then two days before it’s supposed to happen all your dreams get crushed,” he said. “We’ve been paying these bills for months and months with nothing coming in. Mother Nature is a cruel person sometimes.”
And because his workers had not yet received their first paycheck, many are finding difficultly getting unemployment benefits, La Fragola said.
Through Thursday, 509,693 North Carolinians filed for unemployment since March 16. Many of the newly employed have reported problems with the state’s unemployment benefit infrastructure, which is buckling under the record demand.
Despite the cruel timing, La Fragola is one of the better-off cases.
With the help of PPP funds, he believes he’ll be able to make it through the downturn, and eventually open the restaurant. Many others, he says, won’t be as lucky.