SoCal restaurants opt for loans through small banks to stay afloat amid COVID-19
As the first round of funding through the Paycheck Protection Program ran out in less than two weeks, small businesses are choosing smaller, lesser known banks for loans as they weather the COVID-19 emergency.
LOS ANGELES (KABC) -- These are tough times for small businesses, which need loans to stay afloat. But rather than going through big banks - many are opting to go with smaller banks. It's a new economic trend.
Congress just approved a much needed replenishment of the of the Paycheck Protection Program.
The first round of funding ran out in less than two weeks, so now some local restaurateurs who were able to get funding in the first round are offering advice and also some potential issues that may arise.
MORE: 94 publicly traded companies got $365M in PPP loans, investigation finds
71 Above restaurant's sweeping views from downtown L.A. is normally a selling point for this high-end restaurant, but without an easy way to offer food delivery from this high above - the doors have been shut to customers and hundreds of employees since mid-March.
"From that day on, as I said, my number one goal in life was to get people back on payroll and I'm doing that starting today," said Emil Eyvazoff, owner of 71 Above, Takami Sushi & Robata Restaurant.
It's been an emotional few weeks for owner Eyvazoff, but on Tuesday he finally received a loan from the Paycheck Protection Program.
It's all thanks to a small bank in North Carolina, not the big bank with which he typically does business. And he wants other restaurateurs to do the same for the next round of funding.
"Try to get into a queue that's shorter in a bank that is more of a high-touch situation, that's lower numbers and is focused on quality versus quantity," said Eyvazoff.
MORE: Lawsuit alleges banks prioritized larger PPP loan amounts for small businesses
Karen Ross of the home-style restaurant Tally Rand in Burbank also got assistance through a small bank and is finally getting employees back on payroll.
"So to finally hear that yes we got funded through a small bank is an incredible relief because so much of the country in small businesses is just struggling," said Ross.
Ross says the good news didn't last long because unemployment benefits for her furloughed employees are better than what she can pay them. Right now they're getting $600 a week in addition to their unemployment benefits because of the CARES Act.
"Unemployment has made it so lucrative for employees that I furloughed in March to go on unemployment, that they don't really want to come back. They're making much more money not working," said Ross.
Ross says she's about 20 employees short, and her forgiveness on her loan is impacted by how many employees she can get back on payroll.
Another issue for these restaurant owners is -- what to do when the funding runs out and loans cannot continue to cover their payroll, which is expected to last two months? Eyvazoff says he's concerned he may have to lay off his employees once again in the summer if business does not pick back up.
