6 min read
This story originally appeared on The Vertical
Gustav, an artist and aspiring musician from war-torn Kosovo, He only moved to New York a few years ago. In January he opened his own café in East Harlem. Gustav had no shortage of customers, but when COVID-19 struck the situation changed dramatically.
Some restaurants have survived thanks to the home delivery service, but during the pandemic, people are more likely to be content with their coffee machines. Despite his custom mixes, Gustav lost most of his regulars and had to close in March. Even after the reopening, things did not return to normal.
“Sometimes I have two customers a day and I still have to pay the rent,” he said. In May, Gustav applied to JPMorgan Chase for a Payment Protection Program (PPP) loan, but it was denied. “I don’t think I’m an immigrant: I have a green card. Maybe you are concerned because my store is new and located in Harlem? “”
Do bankers speak another language?
According to a June report by the National Office for Economic Research Conditions associated with COVID-19 wiped out 36 percent of immigrant-owned businesses between February and April. Typical immigrant-owned businesses include restaurants, beauty salons, dry cleaners, and gas stations, which have been hardest hit during the pandemic. Why haven’t PPP loans hit their target?
One reason is language, says Rita MacDonald-Korth, founder of Miami-based retailer Presenteur. His business has seen sales drop by 85 to 90 percent since mid-March. In April, Rita and her husband Ducan, also a small business owner, launched the COVID Loan Tracker initiative to help other entrepreneurs understand where PPP money is going and to keep the business world connected with data.
“In particular, the IRS forms, which are an essential and mandatory part of the application for all lenders, are aimed at professional accountants, not real small business owners,” Rita and Duncan MacDonald-Korth write in a statement. “The terms and terminology are difficult even if you speak English as a mother tongue. If you aren’t, they are almost impossible. “
Some immigrant entrepreneurs who have managed to stay afloat However, during the shutdown they were quickly applied after the reopening and were simply ignored by their banks. Veronika, founder of a small digital consulting firm, said her experience was just frustrating.
“I was hoping to survive by offering customers deep discounts,” he says. “I finally reached my limit in mid-June. But I couldn’t even ask for help. The site has been inaccessible since 4 a.m. despite trying different browsers and devices. I called my bank and asked them to send me the forms, but they never answered. There did not appear to be any connection between the customer service department and the people who handled these loans. “
Migrant entrepreneurs who applied early appeared to have better luck. Sebastiano Capitta, co-owner of Bettolona, an Italian restaurant in Harlem, said he applied for the first time in April and received no response. Then he was rejected in May, but then his bank changed its mind. “Suddenly I was approved,” says Capitta. At first, however, he was reluctant to use the money.
“The rules were confusing: we had to spend the loan in eight weeks with 75 percent for payroll and 10 percent for insurance,” said Capitta. “The remaining 15 percent could barely cover the rent. Many companies later complained and changed the rules. But we still only spend money on payroll, utilities, and insurance for security reasons. Fortunately, our landlord allowed us to cover part of the rent with a deposit. “
Is there still hope?
Danil Saliukov, co-founder of the marketing startup Insense, He is one of the lucky few international founders who have received help. “We had no problems with the PPP, although we were turned down for an SBA loan because I am a foreign citizen and do not have a green card,” says Saliukov. “Our bank reached out to us and guided us through the process.”
Saliukov spent a few hours understanding the application process and his CPA helped with the documentation. Thanks to the loan, Saliukov was able to support his employees and return to normal. “June was good for us in terms of sales,” he says.
Although the deadline for the PPP program is August 8th and many large banks are no longer accepting applications, there is still hope for entrepreneurs with a migrant background. As of July 31, the SBA announced that it had $ 130 billion remaining, and experts believe an extension is possible.
In addition, a new proposal for small business aid, the RESTART Act, which targets businesses that have suffered the most, could be part of the next stimulus package. The amount of new loans granted depends on the amount of revenue that the company has lost.