SC businesses worry about survival as they wait for second round of federal aid
The month of April was supposed to be a boon in business for the Blue Marlin with the expectancy of the Final Four women’s basketball tournament and the flow of traffic from The Masters in Augusta.
The owners of the Vista district fine-dining restaurant, Bill Dukes and his son, Ryan Dukes, hired additional staff and waited for the crowds.
“It’s the biggest week of restaurant sales in the city of Columbia,” Bill Dukes said.
And then the fast-spreading coronavirus and its resulting disease COVID-19 found its way into the Palmetto State, leading Gov. Henry McMaster to close nonessential businesses, including all indoor dining at restaurants and bars, limiting their options for making money to takeout, curbside pick up and delivery orders.
As businesses reeled, Congress moved swiftly to approve $349 billion in relief in the form of loans that can be forgiven if used to help keep employees on the payroll and meet other business expenses. As of last week, the Small Business Administration had approved more than $2.7 billion in loans for more than 14,000 S.C. small businesses, for an average loan of about $193,000.
But drawing thousands of applicants, the first round of that funding for small business owners has run dry, leaving many businesses, including in South Carolina, in the lurch.
Meanwhile, Congress hasn’t reached a deal yet on putting more money into that program, called the Paycheck Protection Program. But negotiations are reportedly underway to fix that with voices from both sides of the political aisle including U.S. House Majority Whip Jim Clyburn, who represents the Columbia area, and South Carolina’s U.S Sens. Tim Scott and Lindsey Graham, who has been holding calls with business leaders and tweeted this week that if an agreement can’t be reached, members of Congress should cut their own pay.
In a statement to The State, Clyburn said though the CARES Act provided some relief, the federal loan program put “underserved businesses at an unfair disadvantage in seeking assistance.” He said any additional funding for the program must be accompanied by reforms, including for community-base financial institutions.
Fortune fell on Blue Marlin’s owners, who also own a catering business together and the son owns a seafood restaurant, Oak Grove Fish House, in West Columbia. The father and son secured a loan in a matter of days, a success that Bill Dukes highlighted on a Fox Business interview on Monday, telling the host he emailed FOX after hearing another show contributor talk on TV about businesses struggling to get their hands on the federal relief.
The interview was later highlighted in a campaign email for President Donald Trump and in a tweet from the GOP’s national spokesperson.
But some South Carolina businesses are still waiting for help, and others that have received loans say even with the assistance, the road to recovery is far from certain.
Greg Turner Jr. owns and operates Cornerstone Minerals with his father, Greg Turner Sr.
They have four shops in Asheville, Charleston, Greenville and Savannah, selling rocks, minerals and fossils.
The economic climate caused the Turners to close their doors in mid-March, and he laid off employees so they could collect unemployment. Turner Sr. said one issue with the federal loan is that 75% of that money must go to payroll. And that’s too high, he said, arguing that rent and payroll cost roughly the same at his Greenville location.
If he can’t pay his rent, then there’s no business anyway, Turner Sr. said.
“The whole thing (federal loan) evaporates at that point,” he said.
‘This could be a bumpy ride’
The Blue Marlin owners credit their swift steps and their bank for their success in securing a loan.
Dukes says his son aggressively hit the pavement to determine how to quickly secure a federal loan.
In a matter of days after Congress passed and Trump signed the CARES Act, the father and son filed their application with Security Federal Bank and in a week received a loan of about $455,000 — a higher amount than Dukes said they originally calculated on the application.
Seventy-five percent of the loan must be used for payroll. The other 25% can be used for interest, mortgage, rent and utilities.
Starting with a staff of about 60 employees before coronavirus, Dukes told The State they have been able to bring some back.
They hope to have a staff of 45 employees within the next two weeks.
“I was optimistic it (the loan) would come through, but when it happened so fast, it was surprising,” Dukes said. “Our state and federal government, anything bureaucratic whether it’s a big bank or whatever, they usually can’t turn quickly on a dime. The SBA (Small Business Administration) sure turned quick.”
Other South Carolina business owners haven’t had the same run of luck.
James and Jenn McCallister have been in “crisis management” for a month.
The couple has owned for nearly 25 years the Grateful Dead and 1960s-inspired apparel and accessories store Loose Lucy’s in Five Points. Within days of the order shutting down certain businesses, the McCallisters launched an online store and found other ways to adapt their business to the new economic climate. That included applying for a federal loan and a loan through the city of Columbia.
“We did not sit in shock or chagrin,” James McCallister said. “We immediately snapped into action.”
McCallister said getting a city loan was simple. They applied in late March, and about 80% of what they asked for hit their bank account no later than April 15. That money, he said, could keep the store’s doors open, lights on and staff paid for about a month.
As long as the McCallisters adhere to the two-year terms of the loan, they will not have to pay the city back.
As of Friday, the city had loaned about $1 million to more than 200 businesses in the city limits, said Melissa Lindler, director of the Office of Business Opportunities with the city of Columbia. Lindler said less than $35,000 as of Friday was left to disperse.
But getting federal help has been a bit more complex and fraught with a lot of unknowns, McCallister said.
McCallister said he tried to get the loan early, similar to Dukes, but he couldn’t get through to his bank, a large, national chain that “stonewalled” him, he said. He believes the bank didn’t know how much money it was getting from the federal government and how much it could loan out until late in the process. By the time the McCallisters could apply, the federal dollars were gone.
“They (the federal government) need to put more water in the well,” said Brooks Bristow, a beverage attorney from Johns Island and head of the S.C. Brewers Guild.
Bristow represents what has been a booming industry in South Carolina with the growth of popular craft breweries. But the coronavirus threatens to unravel that growth.
“If you haven’t got your money yet, this could be a bumpy ride.”
‘I have tons of faith, but I’m scared as hell’
So, similar to thousands of others, the McCallisters will continue waiting. They aren’t worried about closing down but they are worried when the money will come.
“We’ve been writing our own paychecks just fine for 25 years now,” McCallister said. “Everything we’ve built up and suddenly we have to go on the government dole for a while. It doesn’t feel right to me. It doesn’t feel good.”
In a similar holding pattern is Lexington County Councilman Darrell Hudson, who owns Hudson Brothers Truck Accessories and Hudson Brothers Car Sales in Lexington County with his brother, Chuck Hudson, said they had their best month in January.
“And we’ve had the worst months in 22 years in February and March,” Darrell Hudson said. “It’s gone from 100 miles per hour to stop.”
The brothers applied for disaster relief and a federal loan but hadn’t heard anything back before the federal pool drained.
”It’s gonna be worse than the recession of 2008 if it doesn’t break anytime soon,” Darrell Hudson said.
Unlike in the city of Columbia, Hudson said there is no county or city relief in Lexington.
“I would love to see us delay property tax payments, car tax payments, but I don’t know if the state can handle it,” Darrell Hudson said. ”I have tons of faith, but I’m scared as hell.”
Kristian Niemi, who owns Bourbon on Main Street and Black Rooster in West Columbia, told The State he too applied for federal relief but so far hadn’t heard back. Niemi said that even if his restaurants do reopen, they’ll probably have to reopen under a capacity restriction, potentially further squeezing his restaurants’ budget.
Niemi said it is going to take a while for people to feel comfortable to come back, and, even if restaurants are able to reopen their doors, it will not be long before they also run out of money.
“We’re sure we can reopen,” Niemi said. “We aren’t sure we can survive.”
Reporter Jeff Wilkinson contributed to this story.
This story was originally published April 19, 2020 at 5:00 AM.
