Congressman Tom O’Halleran heard feedback from businesses as he took a tour of Oro valley on the afternoon of Monday, April 5.
O’Halleran (D-AZ01) met with Oro Valley businesses, who received funds through the Paycheck Protection Plan and other funding through the CARES Act.
The meeting, organized by the Oro Valley Chamber of Commerce, included six small business owners, Oro Valley Mayor Joe Winfield, and other members of Oro Valley council.
O’Halleran wanted to hear from businesses as well as inform them of the $1.9 trillion American Rescue Plan Act, recently passed by Congress and signed by President Joe Biden on March 11.
“I’m here to get your input and to let you know a little bit about what’s going on and to talk a little bit about the future and how we’re going to work together as a country,” said O’Halleran.
Many of the businesses present had applied for the Paycheck Protection Plan (PPP) first offered as part of the CARES Act in March 2020 and some applied for the second round after legislation expanded the program in December.
The American Rescue Plan Act would provide an additional $7 billion to PPP and $15 billion for emergency grants for small businesses through the Economic Injury Disaster Loan (EIDL) program
During the meeting, business owners informed O’Halleran of the difficulties they faced attempting to apply for these programs.
Southern Arizona Neuropsychology Associates founder and Clinical Neuropsychologist Dr. Jill Caffrey detailed the roadblocks in filing for the second round of PPP, when her application was flagged for fraud.
She said she had been able to apply for the first round with no issues, but during the second round her application entered by Ready Capital failed to go through. Caffrey tried to get help from the Small Business Administration, but was told she would have to go through the initial lender.
Caffrey had submitted more than 120 tickets to Ready Capital hoping for a response. She informed O’Halleran on Monday that she has since been able to transfer her application to a community banker, who is now helping her through the process.
In order to safeguard against fraud cases, which they saw increase during the first round, the Small Business Administration took longer to process applications. Previously the SBA processed applications almost instantaneously.
“I’m desperately in need of those funds to allow me to cover this,” said Caffrey, whose business is barely starting up again.
She emotionally recounted the hardships faced during the pandemic, but was grateful for the OVSafeSteps program, created in collaboration between the Town of Oro Valley and the Oro Valley Chamber of Commerce.
The program provides reimbursement using $1 million in CARES Act funding to local businesses for expenses on personal protection equipment (PPE), marketing and advertising, and professional and technical consultation services. Qualifying businesses could receive up to $4,500 in reimbursement. The application deadline was April 1 and has provided $714,000 to about 214 businesses as of Thursday, according to Oro Valley Assistant Town Manager Chris Cornelison.
The program is still working with approximately 40 businesses that applied by the deadline and those using the interpreter language services. Funds should be fully allocated by May, said Cornelison.
The Oro Valley Chamber also gave out $75 gift cards to local businesses for their employees. Caffrey recounts receiving 10 gift cards for her clinic so her employees could buy groceries. The Chamber also bought $50 restaurant gift cards and donated them to people in the community. Noble Hops was one of those restaurants. Owner Suzanne Kaiser spoke with O’Halleran as he toured Oro Valley businesses from Harvest Restaurant to El Conquistador Tucson.
Trouble finding workers
Noble Hops, one of three restaurant locations that O’Halleran visited, has had a different experience from many other businesses, but one Kaiser believes is shared by other restaurants.
Last March, Noble Hops closed their indoor dining rooms, while still offering takeout, then opened at about a quarter of their capacity in May, and is now running at half capacity.
After nearly a decade in business, Kaiser believes Noble Hops would have survived last year without the help, but with a large debt.
“We’ve been in business so long, we’ve got a level of ability,” said Kaiser. “Banks will give us money, which they won’t necessarily do to most restaurants, unless they’ve been in business a while. So we’ve got a line of credit for the business and that’s what we would have used, but it would have put us in debt.”
However, Noble Hops received both rounds of PPP, the first round was forgiven and the second round is currently in the first 24 weeks. The funds must be used during this period in order to apply for loan forgiveness. They also received funding through the Economic Injury Disaster Loan (EIDL) program, both the grant and the loan.
Noble Hops also received a total of $4,500 through the OVSafeSteps program.
The issue now is not a decrease in demand or a lack of funding. On the contrary, Kaiser said the demand is there and continues to increase. With warm spring weather, ongoing vaccination efforts and a foundation of regulars, Noble Hops, with its large patio, has seen more business. The problem is a lack of staff.
Kaiser found most of the staff they laid off a year ago, who received unemployment during that time, returned, but about a month ago, when the $1400 stimulus check was distributed, that’s when they had a problem.
“Well it’s not even a matter of qualified, because we’re willing to train, it’s having anybody even apply for jobs,” said Kaiser. She believes people are also looking at other opportunities in the area that may pay more.
“The other problem is that Amazon has impacted Tucson businesses with the amount of employees they need and what they can afford to pay,” said Kaiser. “There’s no way we can compete with that. We can’t pay anybody $30 an hour, unless it’s some of our managers.”
In 2019, Amazon built a fulfillment center at the Port of Tucson and in March announced they would be building a distribution center. The starting pay for Amazon employees whether full or part-time is $15 an hour and is seen by local officials as an opportunity for job growth in Tucson.
However, the competition is not only Amazon. Kaiser said she is competing for staff with other restaurants, which are also experiencing the staff shortage.
“We can’t drive more than we can do,” said Kaiser. “There are fewer restaurants right now, so the demand is higher, and all the restaurants are in the same boat, trying to find staff.”
With 90 to 95 employees, Kaiser said they would need another 10 to 15 to accommodate the amount of business they have, which is still at 50% capacity.
In order to try to bring in more staff, Kaiser said they are offering a cash benefit for anybody at the company who brings in someone and then that person would also receive a cash benefit if they stay a certain amount of time.
Kaiser expects they’ll be hiring for a while.
“I know we’ve hired a number of people in the last week and I know we’ve lost a number of people in the last couple of weeks, so we’re always hiring,” said Kaiser.
Harvest Restaurant owner Reza Shapouri also told O’Halleran, employment is the biggest challenge.
Shapouri said he used to put an ad on Craigslist and receive about 30 or 40 responses. Then he would carefully select a few for interviews and pick out the best.
“Now we put an ad, and I’m doing it every week, and we get maybe one or two with no qualifications, and they don’t even show up,” explained Shapouri. “It’s a totally different labor market right now for this industry.”
He said the experience is the same for everyone he knows, recalling how even iconic Tucson restaurants have closed, such as Downtown Kitchen + Cocktails, which closed its doors in June and in October announced they would not reopen.
Vital government programs
Shapouri told O’Halleran that the assistance from OVSafeSteps, PPP, and EIDL were vital to his restaurant’s survival.
“We lost money,” he said. “Because of (the programs), we made it here now.”
That sentiment was shared by other businesses.
My Gym Children’s Fitness Center owner Kevin Wichers said they closed in March and transitioned to online. When they were slowly reopening, they had to close again due to the Governor’s order but also flooding. During one weekend, the business next door, which had closed and moved out, had a water line break.
“Nobody was around and it just flooded us out,” recalls Wichers.
Wichers expects their loss was about $50,000 from the water leak, but considering the business was down at about 87% during the pandemic, he estimates they lost about $200,000 conservatively last year.
“I would have shut down last June. My lease actually expired last June and I had to really think to myself ‘Do I want to continue doing this process, continue doing this job for three more years, at least in the middle of the pandemic?’” asked Wichers. “So I signed a new lease in June, and there’s no way I’d still even be here today if it wasn’t for the PPP loans and the EIDL loans.”
Wichers applied for both rounds of PPP, which he said covered about a quarter or a third of the $200,000 expected loss. He also applied for the EIDL loan, which he said has kept him going.
While Wichers experience applying for PPP was much smoother, he had to do it on his own.
“It was all just trial and error. Long nights, long days of just putting information together and just staying by the phones, jumping on the email,” said Wichers. “You have to be willing to put in the time to get the loans.”
Wichers also received a little more than $3,500 from the OVSafeSteps program and an additional $2,500 through an emergency relief grant. Some funding he did not even actively look for. Local First Arizona contacted Wichers and covered two months of his rent, simply asking for the invoice from his renter.
Despite the bottom line still down by 60%, Wichers said the business is picking back up. In January they had zero people enrolled in classes and as of April are up to 80.
“Business is increasing, still losing money but getting better, and have the funds still kind of set aside to push us through this,” said Wichers.
Wichers believes his business would be okay, but if a third round of PPP becomes available, he would apply as the future remains unclear.
“I might be okay but you just know that they’re saying we’re heading into the fourth wave now and it’s like ‘God bless, when is this going to end?’” exclaimed Wicher. “My staff is all vaccinated. We use protective gear all day long, but you just don’t know. You just don’t know what’s going to happen.”
Helen Thoenes, a new business owner of GRITfit gym and a recipient of $42,000 in PPP, EIDL loan and OVSafeSteps funding, said at the meeting Monday without the funding “we just would not have made it.”
Thoenes said she is in a much better place from many other businesses present at the meeting, without children or employees dependent on her for income, and was able to decide not to take pay.
“I still have no idea what money came from the town, what money came from my grants, what money came from the federal government–I did actually know that part–but it’s very hard to keep track,” said Thoenes.
She did recognize the work of Oro Valley Economic Development Specialist Margie Adler, calling her a hero.
“We would not have received a good portion of the money that we got had you not pestered us,” Thoenes told Adler, who attended the meeting.
O’Halleran said the big takeaway from his visit was “on the whole, the PPP worked” once they adjusted it by July, but he said he was still concerned about the future.
“How do we address things going forward, especially for the restaurant industry but also other small businesses, to not only keep them in business, as we go along further on COVID?” said O’Halleran. “These businesses are part of the core of the community, and we want to make sure they can open up again.”
The American Relief Plan would create a $28.6 billion Restaurant Revitalization Fund to offer support to restaurants and bars with fewer than 20 locations that have been hit hardest by the pandemic, with $5 billion set-aside to target smaller establishments that made fewer than $500,000 in 2019 revenue.
The bill establishes the Community Navigator pilot program to help increase awareness of and participation in COVID-19 relief programs for business owners. It also creates a State Small Business Credit Initiative, which provides $10 billion to support up to $100 billion in small business financing through state, territorial, and tribal government programs.
At the Pima County Board of Supervisors’ April 6 meeting, Billy Kovacs, outreach director for Rep. Ann Kirkpatrick (D-AZ02), indicated all businesses looking to apply for PPP or other loans should apply directly through SBA and prepare any financial information before applying.
O’Halleran hopes there will be no need for another bill, but if it’s necessary he said, “we need to do it with what we’ve learned, and this is part of my learning experience right here.”
U.S. Reps Visit Vaccination Site
O’Halleran joined Kirkpatrick to visit the Tucson Medical Center’s vaccination site on Tuesday, April 6. As of last week, the site had administered more than 100,000 vaccinations.
Kirkpatrick said Pima County’s vaccination effort increased by 90% since the passage of the American Rescue Plan.
“We look forward to continuing to get people vaccinated, get our kids back in school, get families back to work, businesses back and thriving,” said Kirkpatrick. “As an appropriator I am especially proud of the funding we were able to get for state and local governments.”
The bill allocated $150 million in CDC grants to distribute the vaccine, as well as $960 million to the state for testing, tracing and mitigation. It also provided a total of about $203 million in direct funding to Pima County.
O’Halleran emphasizes the need for a “united front” against this pandemic.
“We have to have the resolve to be able to recognize that none of us are alone in this process and we are all needed to be here and vaccination centers like this across our country, day in and day out ‘til we are 100% covered from this virus,” said O’Halleran. “Hopefully all Americans will get in their cars, get in line and get this done.”