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In immigrant and minority neighborhoods, business owners often don’t have the know-how or connections to apply for the federal government’s emergency loans to small firms. And in the $349 billion first round of the Paycheck Protection Program, bigger companies and less needy areas snapped up most of the money. But in the PPP’s $310 billion second round, a concerted effort by a local Chicago credit union secured loans for some of the hundreds of restaurants, taquerías, hair salons, dollar stores, and other companies that cram this roughly 3-square-mile neighborhood known as Little Village.
The money is helping to sustain the local Nuevo Leon restaurant, a nonprofit community development organization, and a funeral home, among others, while they struggle to survive the pandemic’s economic squeeze.
Will this onetime infusion be enough to ensure their survival? Laura Gutierrez, owner of the Nuevo Leon, is not optimistic. Rudy Medina, president of Second Federal, part of a Federal Credit Union, puts it this way: “This was a breather for a lot of businesses, a good breather. But it’s not enough.”
It’s afternoon at Nuevo Leon, a popular restaurant in the once bustling immigrant neighborhood of Little Village, a roughly 3-square-mile slice of Chicago’s West Side. Now the room is empty, the furniture pushed to one side. The owner, Laura Gutierrez, sits alone at a small table where she takes the orders that trickle in each day over the phone.
“Sure, my love,” she says, “What would you like? The cold dinner? Anything else?”
Her surface cheer conceals a deeper gloom. The coronavirus and its economic pain have fallen hard upon Little Village, where many of its hundreds of businesses – restaurants, cafés, taquerias, hair salons, dollar stores, travel agencies, groceries, jewelers, dress boutiques, roofing companies, and more – are either closed or hardly working. Sales at Nuevo Leon, which has been filling carry-out orders since March, have reached barely 5% of what they once were.
Yet there’s one consolation: Federal emergency loans have finally arrived at Nuevo Leon and many other businesses across Little Village, offering at least a temporary reprieve from financial disaster. The question now facing these small businesses is whether that federal lifeline will be enough to see them through until they’re allowed to reopen. That was Friday, May 29, for Illinois barbershops, salons, offices and manufacturers; no sooner than late June for restaurants and bars.
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“This was a breather for a lot of businesses,” says Rudy Medina, president of Second Federal, a part of the Self-Help Federal Credit Union, which was active in getting Little Village businesses to sign up for the federal aid. “A good breather. But it’s not enough.”
Blanca Soto, head of the Little Village Chamber of Commerce, says she hopes that the entrepreneurial spirit of the immigrants of Little Village will help see them through their current troubles. “That’s where the strength is,” she says. Ms. Gutierrez is more pessimistic. “I don’t see a light at the end of the tunnel,” she says. A new rule that will allow Illinois restaurants to serve guests in outdoor seating beginning next Friday won’t help her restaurant, she says: There’s no room on the sidewalk.
For the smallest businesses, especially those in minority neighborhoods and other underserved areas, federal help has been slow in coming. Money from the Paycheck Protection Program (PPP) first became available in early April, offering businesses with fewer than 500 employees eight weeks of payroll and other expenses. The aim was to encourage them to retain workers. But most of the $349 billion didn’t go to the areas that needed it most, according to an analysis by Business Insider. Instead, it was quickly snatched up by larger businesses with established relationships with big banks. In less than two weeks the money was gone.
“The big institutions just took care of their own,” says Jaime di Paulo, head of the Illinois Hispanic Chamber of Commerce. “We noticed that a lot of the small businesses were left out.”
Others saw the same thing happening in Chatham, an African American neighborhood a few miles from Little Village. “There was a lot of panic, a lot of questions, a lot of uncertainties,” says Pattilyn Beals, interim director of the Chatham Business Association. “I think a lot of businesses expected to get something. Unfortunately, that wasn’t the case.”
In Little Village, many business owners didn’t even know about the program. Other were simply skeptical of borrowing money and didn’t understand that the loans would turn into grants if spent mostly on payroll. So when Congress funded a second round of business loans last month, worth $310 billion, Mr. Medina’s Second Federal redoubled its outreach. After securing about 300 loans in the first round, it nearly doubled that amount in the first two weeks of the second round.
Ms. Gutierrez of Nuevo Leon didn’t apply at first. “I didn’t think I could get one,” she says. But with Second Federal’s help she got her check quickly, in the middle of April.
“This means I’m going to be able to pay my employees and my utilities,” she says. She has cut back hours and reduced her staff from 15 full-time workers to seven part-timers. They have learned to cook in smaller batches. There was a small crisis when the closure of meat packing plants drove up meat prices and she wrestled with whether to raise her prices.
“How far can you go?” she asks. “If I’m going to increase it, there are fewer people who are going to eat, or going to do pickup.” In the end, she didn’t increase prices. “We are nothing without our community,” she adds.
Not everyone qualifies
PPP loans have helped nonprofits, too. Telpochcalli Community Education Project, a tiny community development organization in Little Village, received $12,000. “It means peace of mind,” says Maria Velazquez, Telpochcalli’s director. “It means I can concentrate on what I’m doing now, how we can support families.”
The group helps families survive the pandemic, many of them poor and undocumented, helping them get food and diapers from local donors, pay rent, and receive health care. Some needs still can’t be met. A single mother with five children came down with COVID-19, and only a relative was willing to help the mother out, a few hours a day. “How can we help her? We still don’t have a plan for that,” says Ms. Velazquez.
Not everyone has been able to get a loan. On 26th Street, the heart of Little Village, Maria Sotelo runs a small cafe that sells sandwiches and waffles but is best known for its natural fruit drinks. Before COVID-19, the cafe took in $600 to $800 a day, selling to shoppers who crowded the street. Now the sidewalks are empty and she brings in only $100 to $200. She’s had to cut the hours of the young woman who is her only employee from eight hours a day to just three or four.
Ms. Sotelo applied for a $6,000 loan and was turned down – twice. She doesn’t know why. She’ll stay open as long as she can. “I have to keep it open every day so I can at least pay my rent,” she says. “I still haven’t paid my taxes. There’s no money for taxes.”
Lots of business, less profit
Even businesses in high demand are facing new challenges. The Martinez Funeral Home, for instance, has plenty of clients right now. But the problem is that increasingly, funeral rituals have been curtailed or abandoned, reducing the income of those who stage and direct them. For example, more and more families have been choosing cremation over burial, says owner Manuel Martinez.
“People are afraid,” he says. Instead of long wakes, the funeral home now holds only short afternoon visitations, with no more than 10 people at a time. Funeral services have been suspended. “The revenue is half of what it would be even though I’m doing more volume,” Mr. Martinez says.
The challenges for Mr. Martinez go well beyond finances. He has tried to find ways to honor the dead and comfort the grieving at a time when many traditions are impossible and extended families can't be together or hug one another.
The PPP has been a lifeline for him and his six employees – three full time, three part time. He says he received $49,000 in a PPP loan and needed it. “It helped tremendously,” he says. “I could pay everybody [and] not have to let anyone go.”
Editor’s note: As a public service, all our coronavirus coverage is free. No paywall.